Facebook Reaps Mobile Ads Benefit, As Profits Climb 138%

Facebook has well and truly silenced any doubters about its ability to monetise its position as the world’s leading social network.

For its second quarter, profits rose a staggering 138 percent and revenues rose an impressive 61 percent. Yet Facebook’s Mark Zuckerberg – in something of a dramatic understatement – simply admitted that the company had had a “good” quarter.

A Good Quarter

So what constitutes a “good quarter” for Facebook? For the period ending 30 June, the company made a net profit of $791m (£464m), up from $333m (£195m) in the same year-ago quarter.

There was likewise good news on the sales side, as revenueswere $2.9bn (£1.7bn), up from $1.8bn (£1.1bn) a year ago. All of this comes after good results in the first quarter, boosted by mobile sales.

“We had a good second quarter,” said Mark Zuckerberg, Facebook founder and CEO in a statement. “Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world.”

The results seem to give the lie to doubters who said that many users are abandoning the site due to ‘Facebook fatigue‘,  and others who state that teenagers think Facebook is no longer cool and are jumping ship to rival social networks like Tumblr. Studies have also questioned the value of advertising on Facebook.

Daily active users (DAUs) on Facebook reached 829 million on average for June, an increase of 19 percent year-over-year. Monthly active users (MAUs) were 1.32 billion as of June 30, an increase of 14 percent year-over-year.

Mobile Advertising

The revenue Facebook made from advertising was $2.68bn (£1.6bn), a 67 percent increase from the same quarter last year. Mobile advertising, a revenue source that was practically non-existent for Facebook when it went public two years ago, now makes up 62 percent of the company’s overall advertising revenues, up from approximately 41 percent of advertising revenue in the second quarter of 2013.

“What Facebook has done with mobile is one of the most impressive things I’ve seen an Internet company do in recent years,” Mark Mahaney, an analyst for RBC Capital Markets was quoted as saying by the Wall Street Journal. But he warned that Google is still the behemoth in the industry and might be only beginning to assert itself on the platform.

In an effort to make even more money from advertising, Facebook earlier this year introduced a mobile advertising network, called the Facebook Audience Network. That new service distributes ads across a network of mobile applications, which could open up a lucrative new source of revenue for the company.

The way it works is that the ‘Facebook Audience Network’ allows developers who are building a mobile app to easily insert various adverts into their software. The developers and Facebook share the advertising money that this generates.

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