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Facebook Earning Below Expected

Mark Zuckerberg and his team announced their 2013 first quarter earnings, and despite the rocky start after the IPO, things are looking pretty good.  The overall revenue was nearly $1.46 Billion which is an improvement of 38% compared with the same quarter in 2012 and above the financial analysts’ predictions.  The net income was below estimates, however, at only $219 million.

Over the past several months there has been talk of concern from investors, users and advertisers that the engagement of Facebook users was going to drop, but quite the opposite is actually taking place.  Facebook reports a 26% growth in the number of users who log in daily (now up to 665 million).  Those who login at least once per month also jumped by a significant 23% to 1.1 billion users.  The number of mobile users is continuing to climb rapidly as well with an increase from 680 million in the 4th quarter of 2012 to 751 million this quarter.

It is clear that advertisers are continuing to see value in using Facebook to promote their products, including using some of the social media giant’s new ‘in feed’ ads.  Facebook brought in $1.25 billion in ad revenue during the first quarter which is a 43% increase from the same quarter last year.  Mobile ads also showed major growth, up 23% from the last quarter of 2012.  Mobile ads now make up 30% of the total ad revenue for Facebook.

Overall it was a very positive report for Facebook and helped to confirm the fact that they are successfully transitioning their business model to a more mobile focused user base which is expected to continue to grow as more people continue to move to smart phones.  The earnings call largely glossed over the generally poor reception of “Facebook Home” saying that it is an excellent product which still needs to be tweaked and improved.  Zuckerberg also discussed the rapid growth of Instiagram which was purchased by Facebook in 2012 commenting on the fact its growth can only benefit the ongoing success of Facebook because of their complimentary functions.

I have to say, I was pleasantly surprised at how well things are going with Facebook.  Maybe I got caught up in all the negative publicity it received after the IPO but I was not expecting them to have as strong of growth across just about every area.  The one area I was expecting to see success was the mobile ads because just in my own experience I have found that I’m seeing ads published right in my news feed in a way which I don’t even notice until I take a second glance.  I expect many people who are less experienced with Facebook and computers in general find themselves tapping on these ads without even realizing they are paid posts.

What do you think?  Does Facebook still represent a great place to invest advertising dollars?  What do you expect from Facebook in the second quarter of 2013?

Pesach Lattin
Pesach Lattin
Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pesach Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.


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