Facebook profits soar thanks to mobile surge

Posted on July 28, 2017

 

A Facebook earnings report, released on Wednesday, revealed that the mobile ad side of its business has increased by more than 50% in the second quarter, cementing its position alongside Alphabet as a clear choice in an ever-growing field of online advertisers.

Stocks in Facebook climbed 4% following the release, leaving shareholders sitting pretty with a 44% climb in 2017 alone. Its growth has even exceeded that of Alphabet, the parent company of Google and YouTube, which reported a 21% increase in growth.

Recently, its two billion regular users have seen more ads on their news feed, along with Instagram’s 700 million users.

Although Facebook saw revenues rise to $9.32bn (£7.12bn) in the second quarter, mobile advertising experienced the most growth, with earnings climbing to $8bn (£6.1bn).

Mobile ad revenue made up a sizable 87% of Facebook’s total revenue, with Laura Martin, an analyst from Needham & Co saying:

“They’re killing it on mobile. They are the de facto mobile advertising monopolies and that’s a really big deal.”

With business booming, Chief Executive Mark Zuckerberg is turning some of his attention to WhatsApp and Messenger in an attempt to monetize the services, which have captured more than one billion users each.

However, his next big push will be Spotlight, a video service aimed at under-25s that is scheduled to roll out by early autumn 2017. It will offer short shows on a range of subjects such as fashion, fitness and food. More categories will be added later, including music, gaming and serialised dramas.

Ricky Van Veen, the creator of CollegeHumor.com, has taken the lead on the new service, and has reportedly partnered with a host of content providers including Buzzfeed, Vox Media and American mass media company Condé Nast, although these companies have yet to go public with their involvement.

It is not Facebook’s first foray into video. Facebook Live was the company’s attempt at streaming content, but it experienced difficulties in monetizing it. The service seems to be slinking into the background as Spotlight takes centre stage, with advertisers reportedly leaving in droves due to controversial content such as live-streamed deaths.

Facebook did not say what proportion of its revenue is attributable to photo sharing app Instagram, but investors will want to know more amid concerns that its News Feed is displaying the maximum number of ads without driving users away.

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