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How Mobile Drives Facebook’s Ad Revenues

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Mobile ad revenues are the primary catalyst

Facebook (FB) has a strong history of posting double-digit revenue growth with its Mobile Advertising segment acting as the primary catalyst. This segment’s revenue has registered incredible growth in the past.

In 2Q16, the segment’s revenues increased by 81% YoY (year-over-year) to reach $5.2 billion, representing approximately 84% of total advertising revenue.

Facebook’s (FB) mobile ad revenues are primarily driven by increased number of users and brand marketers on its platform. Facebook’s ability to grow user engagement in its Mobile segment, coupled with the rise in the number and frequency of ads displayed in the news feed, is driving much of this growth.

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Facebook successfully capitalizes on shift to mobile

Facebook’s mobile monthly active users (or MAUs) constitute about 91.9% of its total MAUs, which stood at ~1.7 billion at the end of 2Q16. These results show the significant shift of users to mobile devices, which influences marketers to catch up with the trend.

Facebook continues to capitalize on consumers’ shift to mobile devices. This increases the number of marketers using its ad products, making the ads more relevant and effective through expanded tools for marketers.

Many brands prefer Facebook for posting videos because its user base is more geographically and demographically diverse than Twitter (TWTR), LinkedIn (LNKD), and Google+ (GOOG). Facebook stated that brand marketers on average are spending more on its platform. The average price per ad for Facebook increased by 9% in 2Q16 while total ad impressions increased by 49%.

News feed ads have significantly higher engagement, click-through rates, and prices per ad than right-column ads. So, a higher proportion of ads appearing in news feeds drives up the overall average price per ad.

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