Social Networking Giant, Facebook has reported softer-than-expected advertising revenue and slower-than-expected expense growth. Most of FB’s clients allow the company to show their ads across both Desktop and Mobile, and thus this quarter’s ad revenue mix is a reflection of FB choosing to serve more impressions on mobile devices
Mobile represented approximately 30% of total ad revenue in the quarter, or $374mn, up 22% sequentially. As such, the implied daily run rate for mobile was $4.25mn versus $3.3mn last quarter. Given the absolute mobile number came in above the Street while total ad revenues were in line, this would imply mobile revenue cannibalizing the desktop ad revenue which was reported at $871Mn.
Facebook is at the center of the mobile ad revolution. While we continue to expect engagement growth to remain at low levels given its 1bn+ users, we see significant opportunity for the company to drive higher pricing on its ad units as brand and direct marketers alike take advantage of its broad reach and precise targeting.
Payments from Games and Other Apps
FB management noted that while the games ecosystem continues to diversify, they face headwinds from declining desktop use in developed markets given that games payments are essentially all from desktop computers, and no monetization strategy from mobile. For non-games payments, the company expects only small contributions from user promoted posts and gifts based on current run rates.
Taking cues [CDN, Mail, G+, Search, Location, etc] from how Google powers its Advertising on Mobile & Internet Facebook is doing a lousy job as its engineers are unable to process the Biggest Social Database which can offer Advertisers far more superior Tools & Options for Ads targeting. FB probably needs some help from Google’s Big Data and Analytics Engineers to roll out these products and offer Google a run for its Ad Dollars.