We All Saw This Coming
November 16th, 2013
After dismal performance shaking investors faith in the profitable viability of a free online service Facebook has upped its game coming back with Q3 earnings in 2013 that blew expectations out of the water. So how did this turnaround come about? Do I need to even ask that question? The answer of course is advertising. Facebook, as expected, has beefed up the number of ads users are exposed in order to drive up revenues. Users have seen this coming since Facebook announced its IPO last year but so far have remained un-phased by the upswing in advertising.
The calmness of the users who used to be so resistant to any kind of change could be explained by the area Facebook has chosen to target to beef-up its ads. Facebook mobile was where the majority of this new revenue came from. This relatively new format could explain the complacency demonstrated from a usually very volatile (and vocal) community of users. The ads boost was substantial however, revenues from Facebook mobile advertising went from $375 million in Q1 to $651 million in Q2, no srop in the bucket. This is great news for investors now but in the future it will make comparable success much harder to achieve for Facebook going forward.