Archived entries for news feed

The Rise of Facebook’s Mobile Advertising Business

In the second quarter Facebook continued its trend of growing mobile ad revenue to a larger share of its total advertising revenue. Although this result is in line with our conclusions based on Facebook’s performance in the first quarter, the significant beat on estimates has resulted in the stock price rising to pre-IPO levels. In order to understand how Facebook has continued to grow mobile ad revenue, we need to reassess its advertising business.

We determined that in the first quarter increases in advertisements delivered and price paid per ad resulted primarily from News Feed ads on Facebook’s desktop product, and to a lesser extent on its mobile products. We also observed increases in user engagement in the quarter. Finally, Facebook’s decision to lower the market reserve price increased market supply for ads on the network essentially by reducing the input costs for advertisers.

Revenue in the second quarter remains highest in North America and Europe; however, the growth in Facebook’s emerging market regions continues to outpace the established markets. The North America region saw $721 million in revenue, an increase of 51% over the year ago quarter. Europe region’s revenue grew from $294 to $479 million, a 53% year-over-year increase. In Asia and rest of world revenue essentially doubled over the year ago quarter.1

Facebook's quarterly advertising revenue by region

Continue reading…

Assessing Facebook’s Advertising Business

As we have come to expect, advertising continues to comprise the majority of Facebook’s revenue. According to the company’s 10-Q filing, advertising accounted for about 86% of Facebook’s revenue in the quarter. Its filings also continue to illustrate the extent to which seasonality affects the company’s advertising revenue. We can also observed the effect of Facebook’s mobile monetization effort, which resulted in about 43% revenue growth over the year ago quarter.1

Facebook generates its advertising revenue from delivery of click-based advertisements on its website and mobile products. According to its 10-Q filing, Facebook’s advertising revenue increased from $872 million in Q1 2012 to $1.245 billion in Q1 2013, a 43% increase in revenue. As the company notes, this was due to a 39% increase in the number of ads delivered to users, and a 3% increase in the average price per ad paid by advertisers over the year ago quarter.

Facebook's quarterly advertising revenue

We can attribute these increases in ads delivered and price paid per ad primarily to the introduction of News Feed advertisements on Facebook’s desktop product, and later on its mobile products. Concurrently, increases in monthly and daily user engagement allowed the company to deliver more ads to users in the quarter. Finally, Facebook’s decision to lower the market reserve price increased the number of click-based advertisements hired on the network.

Continue reading…



Continuance - Facebook Analysis by . @jonmilani. Copyright © 2017. All rights reserved. Hosted by (mt) Media Temple.