Facebook mobile ads help generate $2.9bn revenue

Mobile adverts are key to Facebook's revenue growth

Facebook has reported healthy second-quarter revenues powered by an expanding user base and mobile advertising growth.

In its second-quarter financial results report Facebook revealed that its revenue had grown by 61 percent to $2.9bn. Monthly active users also grew to 1.3 billion.

The social media giant’s net income shot up by 138 percent, giving Facebook $791m this quarter, compared with the $333m it generated at the same time last year.

The share price for Facebook hit record levels, climbing five percent after the company announced its results. At one point the share price hit $76.38 in pre-market trading.

This is in stark contrast to the major share price slump that blighted Facebook when it first went public in May 2012. Investors that held onto their 2012 share will now be close to doubling their money.

Facebook CEO and founder Mark Zuckerberg said the company had a good second quarter and attributes its success to a growing community. Zuckerberg remains ambitious about Facebook’s potential for further growth. “One thing that’s exciting is there is still so much room to grow,” he declared.

Facebook silenced doubts that it might lack the potential to generate money from social media advertising, by posting a 67 percent increase in advertising revenue.

The majority of this revenue was fuelled by an increase in mobile advertising, which now accounts for 62 percent of the company’s total advertising revenue, and is the fastest area of growth for Facebook.

David Wehner, Facebook’s chief financial officer, said mobile users are seeing fewer adverts on Facebook but the price of each advert is rising.

However, while mobile performance is driving Facebook’s advertising success, the number of people viewing Facebook on desktops has been declining. Wehner said that this is an area that Facebook needs to address. “We are seeing declines in the number of people using Facebook on desktop, a challenge in this business going forward,” said Wehner.

Facebook is not the only company reaping rewards from advertising, with Google reporting a hike in revenue generated from adverts in its latest financial report.

Currently, Facebook is almost completely reliant on advertising as its source of income, but the company is demonstrating ambitions to find other ways to generate revenue.

Earlier in July, Facebook added a ‘buy’ button to its News Feed to give users the opportunity to purchase products without navigating away from the social network.

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24 July 2014 | 2:34 pm – Source: v3.co.uk

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