Posted October 29, 2014 4:20 pm by with 0 comments

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FB CollageLast night, Facebook announced the company’s third quarter results and it was better expected. Revenue for Q3 2014 was $3.20 billion, an increase of 59% year-over-year. I’d take that any day.

66% of the revenue came from mobile advertising. Go back and read that line again. That’s up 49% over last year. If you had any doubt that mobile is the future of advertising, that should change your mind right there.

The mobile situation gets even more interesting when you look at active users.

  • Daily active users (DAUs) were 864 million on average for September 2014, an increase of 19% year-over-year.
  • Mobile DAUs were 703 million on average for September 2014, an increase of 39% year-over-year.
  • Monthly active users (MAUs) were 1.35 billion as of September 30, 2014, an increase of 14% year-over-year.
  • Mobile MAUs were 1.12 billion as of September 30, 2014, an increase of 29% year-over-year.

Here’s what that looks like year-over-year:

Facebook Q3 2014 Users

If the call had ended right there, investors might have gone away with smiles on their face-books. But Chief financial officer David Wehner warned investors that Facebook’s expenses are going up in 2015 to the tune of 55% to 75% percent over 2014’s figures. Ouch. Sure, they made money, but what’s wrong with putting a little in the bank to use in case of an emergency?

Not going to happen. CEO Mark Zuckerberg is on a mission. . . several missions, actually.

In the next five years, he wants to turn Facebook into the best “cross-platform platform” around. That may sound like doubletalk but it’s the best way to describe the relationship betweeen the mother ship and the fleet. Going forward, Zuckerberg wants Messaging, Instagram and WhatsApp to become successful platforms on their own – but ones that all connect back to Facebook in a meaningful way.

The ten year mission is to make the internet available to everyone in the world and he wants to put more time and money into artificial intelligence. Remember, Facebook also owns virtual-reality platform Oculus but it sounds like that’s more of a backpocket project. Right now, VR hasn’t moved much beyond gaming. When it does – and Zuck thinks it will – Facebook will be ready to deliver cute kittens in 3D.

On the marketing front, Chief operating officer Sheryl Sandberg said that Facebook will continue to explore new ways of connecting users with relevant advertising. And they’ll continue to work on new ways to deliver ads. Facebook is fully committed to mobile advertising, which is logical given their mobile user numbers, but marketers aren’t ready to commit for good reason.

. . .today people often have multiple devices and still make many purchases in physical stores. Nielsen data show that the digital industry is less than 60 percent accurate in demographic targeting of ads, which means that four in 10 people are seeing the wrong ads.

Similarly, marketers are not confident that they can measure mobile ad performance. Many of the most commonly used measurement systems overemphasize the value of the last click. This does not make sense, given that studies of Facebook campaigns show that over 90 percent of ad-driven in-store sales come from people who saw an ad but didn’t click on it.

Sandberg says Facebook is moving away from cookie-based ad tech and toward a system that allows marketers to track customers over multiple devices. In other words, marketing can no longer be about the device, it has to be about the person.

If you’d like to see Facebook’s Q3 2014 presentation, you’ll find it right here.