Phenomenal position on mobile; Run-rate of $1.5 billion
Facebook Inc (NASDAQ:FB)’s mobile advertising run-rate of ~$1.5 billion is a phenomenal achievement by the company, and one that is even more impressive, primarily because in the year ago quarter ad revenues from mobile was virtually non-existent. Facebook hasn’t even started monetizing its Instagram platform by displaying ads and is likely to do so in the near-term.
Facebook Inc (NASDAQ:FB)’s recent unveiling of Facebook Home, is a great move towards satisfying and stimulating customers of the firm. A highly social and engaged audience is a great asset for Facebook, as it will be able to earn more revenues from mobile ads. The Facebook Home experience effectively steals some of the thunder of Google Inc (NASDAQ:GOOG) in its own Android OS. The Home function will be the first point of contact for users for all sorts of communication via Facebook on a mobile device. As a result, users of Home will be effectively spending even more time on Facebook’s platform than ever before which translates into much more enhanced levels of engagement, and more monetization opportunities through ad impressions.
According to data from comScore, 4 out of every 5 minutes on smartphones are spent on apps and Facebook Inc (NASDAQ:FB) leads the top app audience ranking in terms of mobile app engagement. Facebook accounts for 23% of all time spent on apps. Facebook’s rival, Google Inc (NASDAQ:GOOG) holds 5 of the top 6 apps in the mobile space. Google is also substantially ahead of Facebook in terms of monetizing users on mobile thanks to its Android OS and wide array of consumer offerings. Google has been generating a lot of revenue from newer hardware offerings riding on the wild success of Android. Tablet and PC sales along with service revenue from Google Play store crossed $1 billion in Q1 2013 for the first time. One thing is for sure, Facebook Home on Android will be having a negative impact on app engagement for Google Inc (NASDAQ:GOOG)’s services.
Going Forward
Facebook Inc (NASDAQ:FB) is in a very strong position to capitalize substantially in the rapid transition towards mobile computing from desktop. And the company’s newer initiatives will aid in that endeavor substantially. Facebook is going on an increased spending-spree to build out these major products, which implies near-term margin compression, but will drive long-term growth. Facebook introduced a number of newer ad products to better serve its advertising clients and the firm remains very focused on building its economic engine for the long-haul.
The article Facebook Is Poised To Outperform originally appeared on Fool.com.
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