Posted July 25, 2013 4:55 pm by with 1 comment

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Mark Zuckerberg hopped on the phone with investors yesterday to discuss the Q2 revenue reports and he had a lot to crow about like a sweet jump in revenue and a 27% increase in daily active users. But what’s really remarkable is the fact that mobile advertising accounted for almost 41% of the ad revenue for the quarter.

Facebook Revenue Q2

After a round first quarter, Facebook came back stronger than ever with a 61% increase in ad revenue over the same quarter last year.

Highlights for the quarter include:

  • Surpassed 1 million active advertisers on Facebook, driven by significant growth in local businesses.
  • Introduced video for Instagram and saw 5 million videos uploaded in the first 24 hours.
  • Facebook for Every Phone has now passed 100 million monthly active users.  In just two years, Facebook for Every Phone has successfully put Facebook into the hands of millions of people around the world with limited access to the Internet, giving them the power to connect and share.
  • Launched products including Verified Pages, hashtags and embedded posts to help people on Facebook connect with their friends about what’s taking place all over the world.
  • Announced that there have now been over 100,000 apps built on Parse, a cloud-based platform that provides scalable cross-platform services and tools for developers to enable them to build apps that span mobile platforms and devices.
  • Facebook’s data center in Lulea, Sweden, began serving live user traffic around the world using Facebook’s Open Compute Project designs and renewable energy.

Take a look at the mobile story.

facebook monthly mobile Q2

Mobile monthly active user numbers are still climbing. They gained more than 250 million users in the past year so it’s no wonder mobile ad sales are flourishing. There’s an audience there  – but there’s also a limit to the available ad space so revenue in this area can only go so high. Users will only tolerate so many ads on a small mobile screen, which means Facebook would have to raise the ad cost in order to continue to grow the revenue. But advertisers are going to want to see a bigger return on their investment and as far as I’m concerned, that’s still a problem.

Facebook has a history of showing ads that aren’t relevant. I mentioned this in a post last week and I’ll say it again. Today, they want me to click for my “coffee profile.” I despise coffee. I also have two ads for Facebook games. But I’m not a Facebook gamer. Clearly, if they bother to match my interests, they know that I was in to TV, movies, fast food, and the internet. Maybe they don’t have an ads that match those interests?

According to Forbes, Zuckerberg talked about plans to put advertising on Instagram. (I can hear the screams now.) He also disputed the fact that teens are running from Facebook, saying that according to their own data, it wasn’t true.

Overall, it was a good quarter for the social media giant. Now, to quote Buffy the Musical, “where do we go from here?”

  • The percentage of revenue from mobile has an enormous potential to be “cooked”. YOU buy ads from Facebook and THEY decide on which platform to place them. This means that they could sell $1M in ads, then decide to shoot them all to mobile. This will look great this month, but…

    When those ads convert much less successfully than the ones did on the desktop last month what happens? If YOU spend $1,000 each month, but see a sharp decrease in your ROI (conversions) what will you do? Hello Google Adsense.

    I’m not saying it’s definitely going to happen, but don’t be shocked when if you see the shift to mobile grow (by percentage), but the total revenue amount stagnate.

    Before you completely dismiss this, answer this: How many ads have you ever clicked on your phone? I’m not saying you’ve never “bought” anything on your phone, but did you click through, then buy?