Facebook recently released its first quarter earnings to a crowd of very curious investors and financial strategists. While its official earnings fell short of projections, Facebook’s profits climbed 58 percent, as compared to last year’s first quarter earnings. Total revenues exceeded $217 million, primarily fueled by significant surges in mobile advertising spending.
With the recent launch of Facebook’s Home mobile software system, which has landed with lukewarm reviews, all eyes are on Facebook as it continues to reveal plans for further takeovers in the mobile space. Of particular interest is how the social network will ramp up its advertising strategies, and how invasive these ads will be on phones and tablets. According to testimony from both Facebook CEO Mark Zuckerberg and Sheryl Sandberg, chief operating officer, Facebook’s overall plan is to focus less on new products and features and more on advertising. Yes, it’s a frightening prospect for all users. Will this be the catalyst that finally transfers the masses to Google+, or will Facebook cash in big with their forecasted moves? If the latest earnings report is any indication, Facebook will continue to prosper.
Recent Mobile Advertising Changes
More than 751 million users access Facebook every month on mobile devices, and overall monthly active users are up 23 percent from just one year ago, totaling 1.1 billion. Zuckerberg said that recent changes in mobile advertising tactics accounts for at least 30 percent of total ad revenues for the first quarter. Furthermore, he stated that mobile installed apps and paid posts significantly added to the company’s 43 percent growth in ad sales.
This year’s new mobile advertising tools work harder to encourage Facebook users to download apps. Facebook also now offers paid posts, which allow small businesses to get their updates in the user feeds of the profiles in their selected demographics. Just how many app downloads are the new tactics spawning? Sandberg told reporters that 3,800 app developers helped drive more than 25 million downloads. The key metric is that 30 percent of advertisers who used paid posts in the last three months were brand new Facebook customers. This was precisely what Facebook was hoping for; more revenues from new customers, who presumably will keep coming back. These changes are only in their infancy, so expect feed ads, or paid posts, to start appearing more frequently — the revenues are warranting more of the same. Good news for Facebook, and potentially bad news for users.
What’s Next for Facebook’s Ad Strategy
Mobile is clearly the focus for new advertising rollouts at Facebook, as the continued increase in phone and tablet usage warrants a comprehensive focus. Experts expect that spending on advertising via mobile devices in the U.S. will rise by more than $3 billion to $7.29 billion this year. Facebook is expected to grab a whopping 13.2 percent of this market share.
The next features on the docket, to be released later this year, will include the ability for companies to send ads directly to users’ Smartphones, even with a locked home screen. Sound invasive? It is, and many are worried that users will quickly be overwhelmed with ads and messages.
Facebook’s top executives, however, don’t seem to be concerned. Zuckerberg continues to state that while the company’s focus is on improving the quality of ads, and not new product development, the user experience remains of utmost importance.
“We continue to watch this very carefully, what we see now makes us more confident that we can do more with advertising over time and we can ramp that up,” Zuckerberg said.
Sandberg, the No. 2 employee behind the well-known CEO, toes the same line. When she was asked if she had concerns over inundating users with too many handset ads, she replied: “Our goal is not to increase the number of ads you receive but to increase the usefulness of those ads to you.” It may not be a stated goal, but it’s clear that more ads are on the menu. No matter how relevant and intriguing they may be, there will definitely be a limit to users’ patience with these ads.
The Slow Movement to Go Home
Facebook’s mobile software system, Home, has showed a serious lack of popularity in its first handful of weeks. At the Google Play online store in mid-April, only 15,000 downloads of Home had occurred, with users rating it a sad two out of five stars. Down but not out, Facebook no doubt has big plans to continue marketing the platform, which essentially transforms a user’s phone into a Facebook-themed operating system. Those running Home would be most susceptible to Facebook’s full-scale handheld ad strategy.
Despite Home’s slow start, there’s little chance Facebook will back away from significant increases in mobile advertising anytime soon. As Sandberg has stated, she sees handhelds as the most important medium for advertising, even trumping TV. “The size of the audience makes this — the phone — a mass medium. It’s as important to a marketer as TV,” she said. “This is as important — if not more important — than television.”
Now that ads have started appearing alongside wall posts, photos, and in news feeds across the site, via handhelds or the web platform, it’s clear we can expect more of the same from Facebook’s next round of releases. The question now is if the enthusiasm of investors will drown out the concerned cries of users and influencers, and where the tipping point will finally be discovered. As it stands now, Facebook will push the limit of our advertising threshold, and will likely only let up if users start leaving en masse. There’s no telling where that line will be drawn, and if Facebook will retreat in time to salvage their gigantic market share.
Digital producer, game designer, Internet marketer and staff writer for SiteProNews, one of the Web’s foremost webmaster and tech news blogs, Tina Courtney-Brown has been shaping online businesses since 1996. She’s produced and marketed innovative content for major players like Disney, as well as boutique startups galore, with fortes including social media, SEO, massively multiplayer games, social networks and project management. Tina is also a certified Reiki practitioner, herbalist, nonprofit director and true cooking diva. Learn more at her personal website, or find her on Facebook and Google+.
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