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Facebook will have to find a way to advertise on mobile if it wants to stay afloat
Facebook users are increasingly moving toward using the website exclusively on mobile. While at first glance this would seem to be a good thing for the company, it may turn out to be anything but if the company doesn’t find a way to sell advertisements on its mobile app soon.
Facebook saw its mobile monthly active users (MAUs) increase by 67% in the year from June 30, 2011 to June 30, 2012, according to a document filed with the Securities and Exchange Commission on Tuesday.
If that wasn’t enough to let Facebook know that mobile advertising will soon be crucial, in June of this year 102 million Facebook users accessed the site exclusively through the mobile app or mobile website, a 23% increased from the 83 million who did the same during March.
The 102 million accounts for nearly 20% of the 543 million MAUs Facebook had in June. The other 441 million, the document says, accessed from both a personal PC and a mobile device.
Facebook attributed the growth in daily active users (DAUs), from 526 million to 552 million in the quarter, to mobile usage.
“The number of DAUs using personal computers was essentially flat and declined modestly in certain key markets such as the United States and Europe, while mobile DAUs continued to increase,” Facebook said.
“Mobile is a huge opportunity for Facebook,” CEO and founder, Mark Zuckerberg pointed out in an earnings call last week, after the release of its first quarterly earnings report as a public company.
“On average, mobile users are around 20 percent more likely to use Facebook on any given day. So mobile not only gives us the potential to connect more people with our services, but it also gives us the ability to provide more value and a more deeply engaging experience.”
If Facebook is going to capitalize on its growing mobile numbers, the company is going to have to find a way to get advertisements on a smaller screen.
Facebook advertising revenue
This past quarter, Facebook saw an extremely large portion, $992 million or 84%, of its total revenue come from advertising. That is a 28% increase quarter to quarter.
The company has made efforts to expand its advertising base, for example by running sponsored advertisements on Zynga’s website, and those efforts have proven to be largely successful. Aquarterly report from ad agency TBG Digital earlier this month showed that Facebook was making 58% more per advertising than it was the year before.
"Our advertising revenue is generated by displaying ad products on the Facebook website or mobile app and third-party affiliated websites. Advertisers pay for ad products which include Sponsored Stories in News Feed, either directly or through their relationships with advertising agencies, based on the number of impressions delivered or the number of clicks made by our users," Facebook said in the SEC document
Still, Facebook has done little to expand their mobile advertising operation beyond the occasional sponsored story. If it wants to retain its current advertising numbers, they are going to have to find a way to advertise on mobile, as fewer and fewer people choose to view the site on their personal computer.
Facebook stock was down nearly 7% in after hours trading, hitting an all time low of $21.61.
(Image source: www.facebook.com)
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