Mobile devices have proved to be a vital component in Facebook’s financial success this past year.
The social media giant reported Wednesday, Jan. 28, that its fourth-quarter earnings rose 34 percent to $701 million, boosted by a 49 percent increase in revenue to $3.58 billion in the fourth quarter compared to $2.59 billion the previous year. These figures surpassed Wall Street’s expectations.
“We’re very pleased with the growth of our business,” said Mark Zuckerberg, Facebook’s chief executive, in a conference call with investors, according to The New York Times.
Facebook reported that by December, it had a total of 1.39 billion monthly users worldwide, marking a 3.2 percent growth since September. The company isn’t signing up users like it used to, but it is earning more revenue per user.
In the United States and Canada, where Facebook has its most developed market, each user was worth $9 in the fourth quarter, up from $6.03; the average user was worth $2.81 to the social network business.
A primary contributor to the social media network’s profits came from the mobile side of the business, with a reported 85 percent of users accessing Facebook on such devices; more than one-third check their accounts exclusively via mobile.
Of its $3.6 billion in advertising revenue, 69 percent came from mobile devices, up from 53 percent in the same time period last year.
Additionally, videos on the social network were reported to be particularly effective in the quarter. Sheryl Sandberg, Facebook’s chief operating officer, told investors during the call that the number of video posts per person rose 75 percent globally in a one-year time frame. Users were viewing three billion videos per day, the Times reported.
“Facebook is a Goliath in mobile,” said Rajeev Chand, head of research at investment bank Rutberg and Co, which focuses on the mobile industry, according to The Wall Street Journal.
“What’s more powerful?” he asked, according to the Journal. “A 30-second slot in a TV program where everybody is DVRing past the ad, or…a Facebook news feed where it’s shared or promoted and gets the attention of users?”
Debra Aho Williamson, an analyst with research firm eMarketer, has monitored the company for years. She said that while the figures released for video were impressive, they could be manipulated, especially as Facebook said last year it would place greater priority on video when choosing what content to display on users’ news feeds.
“If Facebook wants there to be more video on the platform, they can just tweak the algorithm to show more video,” she said, according to the Times.
But Jan Rezab, chief executive of social media analytics company Socialbakers, said businesses were posting more videos on Facebook rather than links to YouTube, the Times reported. Doing this usually increases playback speed, which encourages viewing when businesses pay the social network to display these clips to targeted users.
Facebook still has much room to expand its advertising revenue, Sandberg said.
“For any client, no matter how important they are to us, we represent a very tiny part of their ad spent,” she told the Journal. “We want to drive their business.”
The company also has three other mobile-focused networks – Instagram, Messenger and WhatsApp – but is in no hurry to start reaping revenues from them. The focus is to get more people to use the service rather than making money, Zuckerberg said, comparing it to Facebook’s earlier days.
“It’s really important to get this right and not rush it,” Zuckerberg said, according to the Times. “The most important thing is to help people and businesses connect, create business opportunities and then you get a small amount of the value that you are creating.”
(With reports from The New York Times, The Wall Street Journal and TIME)
