Loading...
Perhaps there was some swagger when Facebook passed its $38 IPO price last May, but things quickly sunk. Investors weren’t buying it. They weren’t buying that Facebook had a plan for marketing on the new markets, as users ditch their PCs and use the computer on their smart phones. Stock plummeted to as low as $14. But things have changed. Facebook has revolutionized their advertising on smartphones and such devices. Word of this came last Wednesday, assuaging investor’s doubts, thus boosting shares more than 40 percent, bringing them temporarily up above their initial price, temporarily, at a 1.2 percent increase at $38.08.
Wednesday’s good news – good news if you want Facebook to be competitive – is that it derived 41 percent of its ad revenue from mobile, $656 million of its $1.6 billion, as the Associated Press reported.
What this means for Facebook users, who might care a little less how competitive the once “free” application was, is that 1 in 20 items in the news feed are ads. The screen is huddled and crowded with all sorts of ads, many that have used search features to narrow down the personal interests of the given viewer, so that, say, if he says he likes philosopher “Nietzsche,” he will get ads selling him “Nietzsche is Pietzsche” t-shirts on the side of the screen.
Whatever the case, Google currently dominates the market with such intrusions, earning 52 percent of the global $8.8 billion mobile ad market last year – and they are expected to grow to 56 percent this year.
Whether Facebook can garnish more of this pie remains to be seen. Mark Mahaney, analyst with RBC Capital Markets, notes that “Facebook was caught flat-footed by the shift to mobile. It took them four or five quarters to catch up.” But now “they appear to be set up as a sustainable high-growth business.” What this means, for the likes of Zuckerman, is that Facebook is coming in the right direction, but still has a ways to go.
Get JD Journal in Your Mail
Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!
