Facebook masters mobile, carrying company to record earnings

Three years ago, mobile was one of its greatest risks, today Facebook's got this figured out

Facebook's efforts to figure out how users want to connect when they're on the move is paying off.

According to the social network's latest earnings report released Wednesday, mobile is carrying the company, pushing it to record fourth-quarter results.

It's an impressive pivot for Facebook, which a few years ago struggled to figure out its mobile strategy and listed it as its biggest challenge. In 2012, when Facebook co-founder and CEO Mark Zuckerberg was trying to sell potential investors on his company prior to its IPO, he had to admit they hadn't figured out a way to monetize mobile. In an amended filing with the U.S. Securities and Exchange Commission, the company even said mobility was one of Facebook’s biggest risk factors.

Fast forward three-and-a-half years and Facebook has not only figured out mobile, its mobile ad revenue accounted for 80% of its fourth-quarter total ad revenue compared with 69% in the same time period a year earlier.

Facebook also reported that overall sales in the fourth quarter jumped 52% year-over-year to $5.84 billion. Profit also increased, going from $701 million a year ago to $1.56 billion in the last quarter.

The company's financial results outpaced Wall Street's expectations of $5.37 billion in revenue and $1.2 billion in profit, for the fourth quarter.

"Well, Facebook is not making any mistakes with mobile," said Ezra Gottheil, an analyst with Technology Business Research. "It has a superb mobile app design and superb back-end technology. It's simple and it works. Connecting with friends is a basic human need for most people, and Facebook is the obvious way to do it."

Brian Blau, an analyst with Gartner, noted that Facebook has done well figuring out its advertising solutions and its mobile efforts have connected perfectly with them.

"The core of the Facebook user base is inherently mobile in nature, and Facebook has responded by offering a great app that people find very useful," Blau said. "Their focus on features and functions that allow for mobility has enabled their user base to easily transition from desktop to mobile use."

Blau also said the company is smart to continually make small adjustments to its app.

"Facebook has done well with a sustained focus on making their mobile experience a priority," he said. "They have tuned their mobile apps to not only provide great interaction, but they also understand that the app has to meet user needs. Listening to users, responding quickly with fixes and solutions, and their constant improvements all go toward creating a superior mobile app experience that users keep coming back to."

Part of what makes Facebook's efforts stand out is that the company manages to update its app without ticking off its users. That's not easy when designers have so little real estate to work with, and users are demanding more functionality.

"They are generating revenue without [angering] users," said Rob Enderle, an analyst with the Enderle Group. "This is very difficult on small screens. And Facebook, in an impressively short period of time, has gone from clueless on mobile to what is likely the best example of how to do this right, based on their financial results."

Gottheil said to continue to succeed with mobile, Facebook needs to focus on keeping its app simple, straightforward and fast, while paying attention to user privacy and complaints.

Company executives also need to keep an eye on Google, Enderle said.

"Right now [Facebook is] likely scaring the heck out of Google," he said. "They need to anticipate a Google response and consolidate their control over advertisers so Google can't make a competitive move and take back the value Facebook has fought so hard to create."

Join the newsletter!

Error: Please check your email address.
Show Comments

Blog Posts

How to leverage the Internet of Things to understand consumer intent

'Intent' is the single largest performance marketing variable. It shapes our search queries, dictates our purchase paths and mediates meaningful interactions with brands regardless of channel, media or content type.

Oliver Smith

Business development, Performics Australia

3 ways customer data can increase online sales conversion

Data has been an increasingly critical factor in improving the efficiency and effectiveness of marketing and business operations.

James Bennett

Chief experience officer, Kalido

Our sharing future is both terrifying and exciting

Discussing the future in a realistic fashion is often a disappointing prospect. For all the talk of hoverboards, jetpacks and lightsabers changing the way we do things, the reality tends to end up being something as mundane as a slightly cheaper way to get around the city.

Jason Dooris

CEO and founder, Atomic 212

Hi, i am an Aistralian ALK patient, been on xalkori dec 13 to oct 15 and achieved remission of disease, since been on Ceritinib until no...

gary packer

Pfizer Australia adopts AI-powered digital analyst tool for sales and marketing decision making

Read more

Hi James, shouldn't marketers also be focusing on collecting and utilizing up to date first-party profiling data on customers so that mes...

Tom

3 ways customer data can increase online sales conversion

Read more

Wouldn't reconnecting with younger consumers be in direct contravention of the code on alcohol advertising?

Tim Palmer

Vodka Cruiser reconnects with younger consumers via category-first Facebook Live campaign

Read more

Thanks for the article Jennifer, you raise some interesting points. The supermarket and shopping centre examples particularly struck a c...

Jill Brennan

Why marketers should take note of social robots

Read more

Winning the retail game is really tricky at this point in time. Many retailers have declared themselves as bankrupt. But yes harnessing t...

Vanessa.M.Magers

​Bricks and clicks: Balancing digital and physical to win the retail game

Read more

Latest Podcast

More podcasts

Sign in