Instagram growing quickly as Facebook mobile revenues double

Mark Zuckberg: says Instagram is doing well as Facebook mobile revenue growsFacebook beat Wall Street’s expectations and revenues climbed 40% in the fourth quarter with a doubling of mobile revenues. Fourth-quarter earnings hit $64m (£40.5m), compared with $302m a year earlier, on revenues of $1.59bn. There was good news as well on the mobile front as the company announced that mobile revenues had doubled and that mobile users now exceeded desktop ones.

Overall ad revenue in the fourth quarter grew 41% to $1.33bn and chief executive Mark Zuckerberg said mobile revenue accounted for 23% of advertising revenue, compared with 14% in the third quarter.

Zuckerberg said that Instagram was doing well that it would help future rich
Zuck on ad formats. He says Instagram will help “rich” media experiences.

“One of the product design principles is, we want the organic content to be of the same basic types of format as paid contact. Historically, advertisers want really rich things and we haven’t provided those. But one of the things we’ve provided in the last year, you see the organic News Feed posts move to richer mediums.

“A lot of that comes from immersive experiences like Instagram. When you have those form factors for content, that gives you the ability to offer those form factors for advertisements well,” Zuckerberg said.

Facebook reported 680 mobile monthly active users in Q4, of which 157 million were exclusively mobile.

Zuckerberg said: “In 2012, we connected over a billion people and became a mobile company.”

Facebook earns more on mobile

According to eMarketer Facebook earned more US mobile display revenue than any other ad publisher in 2012. The social network took home an 18.4% share of the US mobile display advertising market in 2012. Google’s mobile display business is also growing quickly. The company earned an estimated 17% share of US mobile display ad revenues last year, eMarketer estimates.

Google’s share of the overall US mobile ad market is much higher thanks to its strong search business. Google now controls a 53.5% share of all US mobile ad revenues, eMarketer estimates, compared to the next highest competitor, Facebook, at 8.4%.

Mobile advertising grew 180% to more than $4 billion in the US last year, according to eMarketer, and is expected to grow further to $7.19 billion in 2013.

No Facebook phone

Zuckerberg also took the opportunity (once again) to tell the world that there would be no Facebook phone.

“We’re not going to build a phone,” said Zuckerberg as he tried once again to put those Facebook phone rumours to bed.

Has he thought about an Instagram phone? Just kidding. Kind of.

Facebook shares slide

However, its shares initially slid as profits fell. This was due in part to additional spending on research and development and the fact that some analysts had expected higher mobile revenues.

The overall feeling though was that Facebook had a solid quarter and its shares bounced back in late trading.

Eden Zoller, principal analyst at Ovum, said Facebook’s results give cause for optimism and suggest the company is on the right track following its disappointing IPO and the lacklustre two quarters that immediately followed.

He said the mobile performance stood out: “What stands out from Facebook’s Q4 results is the centrality of mobile for its service strategy and growth. Revenues from mobile advertising accounted for 23% of total advertising revenues compared to 14% in the previous quarter, with sponsored stories in the mobile news feed and app install ads proving effective.

“Wal-Mart alone delivered 50 million mobile ads to customers. This solid progress on the mobile advertising front should be applauded as a key challenge for Facebook has been how to monetize its growing mobile user base, particularly as an increasing number interact with the platform by only via mobile devices.”