Facebook Officially A Mobile Ad Firm With 53% Of Ad Revenue Now Coming From Its 945M Mobile Users

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Facebook hit a major milestone with today’s Q4 2013 earnings as it crossed the halfway point and now earns 53% of ad revenue from mobile, or $1.37 billion of its $2.59 billion in revenue this quarter. The small-screen skrilla comes from 556 million daily mobile users up from 507 million in Q3, and 945 million monthly mobile users up from 874 million. Overall, Facebook hit 757 million total daily users and a cool 1.23 billion monthly users up from 1.19 billion in Q3.

Facebook reached 49% of ad revenue from mobile in Q3 2013 up from 41% in Q2 and 30% in Q1. But now 53% of its $2.59 billion in revenue came from mobile. On the earnings call, Facebook said Q4 was its first billion dollar mobile ad revenue quarter, and it made nearly as much on mobile in Q4 2013 as it did from mobile and desktop in Q4 2012.

The boost has been driven by Facebook’s mobile app install ads that help developers get their apps discovered outside of the cluttered app stores. This quarter Facebook also introduced new mobile app re-engagement ads that can get users back into apps they downloaded and forgot about. “This is working even better than we hoped” COO Sheryl Sandberg said on the earnings call.

While many predicted the mobile era might kill Facebook, the company has made a remarkable shift on the business side to take advantage of the new medium where others have faltered. Because users spend so much time in Facebook’s News Feed and it knows so much about them, it can show well-targeted, relevant, full-screen ads that bring in good rates. That’s helped every geographic region see total revenue increase of 65% or more over the year.

As for user growth, Facebook’s mobile-only user count increased significantly from 254 million in Q3 2013 to 296 million in Q4. That could mean Facebook users are ditching their desktop entirely, or it’s just recruiting more mobile-only users in developing nations where desktops are scarce.

While Facebook’s total monthly user count increased 3.36% this quarter and 16% year-over-year (172 million), in the US + Canada it only grew 1% from 199 million to 201 million in Q4. That signals Facebook is reaching saturation in those markets and may have begun to lose steam with younger demographics.

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On last quarter’s earnings it admitted that it saw “a decrease in daily users specificallyamong younger teens” which caused its share value to drop 15%, erradicating growth it made from strong Q3 financials.

At 4:50pm EST, just before the earnings call, Facebook shares are up 10% to $58.90 in after-hours trading. But as I wrote this morning, teens have the potential to make or break Facebook’s share price today. You can expect all ears to be listening for what Mark Zuckerberg says on the upcoming earnings call about how kids are using Facebook.

Update: Facebook said it didn’t have any new data to share on teens. Without damning evidence to go on, investors have responded favorably to Facebook earning $2.59 billion in revenue.

What was interesting was how Zuckerberg outlined a big new strategy for Facebook: more standalone apps. Read about it in my long-form feature piece “Facebook’s Plot To Conquer Mobile: Shatter Itself Into Pieces“.]

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Click below for more on Facebook’s earnings:

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Why Advertisers Should Use CPA Bidding on Facebook

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Until now, advertisers on Facebook have only been able to bid on campaigns on either a CPC or CPM basis. While this has been an effective way for businesses and brands to bid for ads, there is no guarantee that clicks and impressions actually lead to conversions. To capture more performance marketing spend, Facebook is introducing a new option to bid on a cost-per-action (CPA) basis.

CPA bidding is available today on a global basis through Facebook Ads’ API, and according to Marketing Land will soon be available in the Power Editor and Ads Manager. Currently, marketers are able to do CPA bidding on three types of ads or actions:

  • Page Likes
  • Offer Claims
  • Link Opens/Clicks (specific click-throughs [e.g., to a product profile page] the marketer wants)

This new option to bid on a CPA basis will operate as a maximum bid, but as with all CPA bidding, advertisers may actually pay less than their max bids. Facebook says this benefits marketers by offering more “predictability” in their ad spending. This option is also better than bidding with CPM or CPC, as bidding with CPA guarantees lead generation and facilitates conversions. By paying for an actual action – such as an offer claim, rather than just a click on the offer – advertisers are assured that there is actual value in their campaigns. Despite all the hype of social advertising benefiting “brand awareness,” the bottom line of any campaign should be to produce a positive ROI. With this new CPA option, advertisers on Facebook can now actually see – and only pay for – ads that perform well and lead to a positive ROI.

Of course, if you’re still convinced that CPC and CPM bidding is better for your brand, don’t worry – Facebook isn’t replacing these options with CPA. Advertisers will still be able to choose these options when creating campaigns.