Naina KhedekarJul 25, 2014 16:39:50 IST
In the last couple of years, the tech industry has seen a peculiar shift from web to mobile. While some companies showed quick adaptability, Facebook easily stood among the ones who were accused for its slow and sometimes no adaptability to the mobile space. Almost after a year of accusations and failed attempts, Zuckerberg finally shows us that he is capable of turning the tables and building the social network into a profitable mobile advertising firm.
Yesterday, the company posted its Q2 earning results and clearly it had some spectacular numbers to flaunt. Facebook hasn’t just exceeded Wall Street expectations, but is now being valued more than AT&T and even Coke. The big numbers are driven by nothing but its mobile advertising business that has more than doubled.
The mobile advertising revenue has grown 151 percent year-over-year and now it is roughly 62 percent of Facebook's overall ad revenue. Yes, you heard it right, 62 percent of the overall $2.91 billion revenue has come from advertising on mobile devices. Facebook has 1.32 billion monthly users and roughly 63 percent are believed to access the service every day.
The company has also been accused for its inability to hook teenagers’ interest and probably it isn’t the place it used to be once for the younger generation. However, it should be noted that the company managed to add 40 million new users in the second quarter. Add to that, around one-fifth of the world’s population accesses the social site at least once a month, points out WSJ.
It should also be noted that it’s been only two years since the company decided to place ads on its mobile site as well as apps, and now into third-party apps. The company has been working on mobile advertising strategies for some time now. In such a short span of time, it would soon be fighting out for the mobile advertising space with Google. Though Google still tops the list of mobile advertisers, Facebook has seen a rise from 9 percent to 18 percent in just two years, which is tremendous growth for a company, which was accused of not knowing mobile.
In April, the company launched a mobile advertising network. “Facebook has also invested in market research data to try to prove to brands that ads on the platform are effective. It has convinced some large advertisers to put more resources into Facebook, helping boost revenue. But there are still skeptical advertisers, and if Facebook can convince them, too, it will see even more growth,” points out WSJ.
The report further narrates how Sheryl Sandberg – who recently visited India – believed Facebook can sell ads to small businesses. In fact, Facebook has an advertising campaign that has been especially crafted for low-end phones in India. “Sandberg told the story of Chumbak, a maker of Indian-inspired products. After the company's owners used their life savings to start Chumbak, they began purchasing Facebook ads, which are now responsible for generating 35% of that company's online revenue,” adds the report.
Besides focussing on increasing mobile ad revenue, the company has also managed to significantly transform itself from a web product to mobile product. From Facebook Messenger to its mega-purchase of the popular WhatsApp at the start of the year, the company has been exploring the space beyond its core product. After a failed attempt at acquiring Snapchat, the company even went ahead and tried its hand, yet again, at building a Snapchat rip-off called Slingshot.
Acquiring Oculus yet again marks Facebook’s enthusiasm to go beyond social and mobile. Oculus is known for its virtual reality 3D headset called Oculus Rift and its work in virtual reality UI and interfaces could power future versions of Facebook, wherever Zuckerberg decides the company needs to go. Oculus not only gives Facebook an edge in the gaming world, but it's a way of starting work on the post-mobile world.
Trying to expand its mobile revenue sources further, Zuckerberg is rumoured to be in ‘preliminary talks with Uber CEO Travis Kalanick’ on the potential of embedding the service into the Facebook Messenger app. It would help Facebook do some ground work for the e-commerce initiatives it plans for the future. If you remember, the social network has confirmed that it is testing a ‘Buy’ button that would allow users to buy products through an ad or company post.
So Facebook can do mobile. Zuckerberg said last year that standalone apps and mobile growth is the way forward for the company, which is starting to be seen as uncool as thousands of apps compete for your attention. But its turnaround, in terms of revenue, at least indicates the Zuck and Co are heading in the right direction.
Tech2 is now on WhatsApp. For all the buzz on the latest tech and science, sign up for our WhatsApp services. Just go to Tech2.com/Whatsapp and hit the Subscribe button.