How Facebook cracked the cash code: Mobile ads up 99% in Q4

Advertising revenues of the world’s largest social media portal were $3.59 billion, up 53 per cent from the same quarter last year. (Supplied)

Facebook has announced its quarterly earnings, and by the looks of it, the social media giant has managed to crack the profits code that has so far eluded online marketers.

“2014 was a year of great progress on our mission to connect the world. Now, 1.39 billion people connect on Facebook each month, and our community reached a lot of other important milestones too. These numbers represent billions of moments of sharing and friendship worldwide,” said founder and CEO Mark Zuckerberg in his blog post this morning

Advertising revenues of the world’s largest social media portal were $3.59 billion, up 53 per cent from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, revenue from advertising would have increased by 58 per cent, Facebook said.

Within that, mobile advertising revenue represented approximately 69 per cent of advertising revenue and have grown a massive 99 per cent since Q4 2013, the Zuckerberg announced.

Overall revenues grew 58 per cent year-over-year to reach $12.47 billion while its revenue for the fourth quarter of 2014 totalled $3.85 billion, an increase of 49 per cent, compared with $2.59 billion in the fourth quarter of 2013.

“One interesting sign of our continued growth in engagement is through our progress on visual and public content. More than 2 billion photos are now shared daily on Facebook, Instagram, Messenger and WhatsApp,” Zuckerberg said while announcing the results.

“Video also grew significantly this year, with an average of more than 3 billion video views daily on Facebook. And there are now more than 2 billion interactions every week on Facebook between public figures and their fans,” he added.

Facebook noted that video grew dramatically on social media site in 2014, especially around global events like the World Cup and the ALS Ice Bucket Challenge.

The number of active users per month on Facebook surged 13 per cent year-over-year to 1.39 billion as of December 31, 2014, he said.

Sheryl Sandberg, COO of Facebook, highlighted what's ahead in her remarks: “Heading into 2015, we are excited to build on the progress we’ve made with our core ad products, as well as with newer areas like video, Instagram and ad tech. It’s still early days in all of these efforts. There is a lot of hard work to do, and we plan to invest aggressively.”

She also said that Facebook's “ultimate goal is to be a critical business partner to our clients – providing people-based marketing at scale to build their brands and move their products off shelves.”
 
People using Facebook continues to grow:

•Daily active users (DAUs) were 890 million on average for December 2014, an increase of 18 per cent year-over-year.

•Mobile DAUs were 745 million on average for December 2014, an increase of 34 per cent year-over-year.

•Monthly active users (MAUs) were 1.39 billion as of December 31, 2014, an increase of 13% year-over-year.

•Mobile MAUs were 1.19 billion as of December 31, 2014, an increase of 26% year-over-year.

•64% of its 1.39 billion users came back to Facebook every day

Here's how Facebook made inroads into growing advertising:

1) Capitalising on the shift to mobile:

•Video grew dramatically on Facebook in 2014, especially around global events like the World Cup and the ALS Ice Bucket Challenge.

•In just one year, the number of video posts per person on Facebook increased 75% globally and 94% in the US. Today, over 50% of people in the US who come to Facebook daily watch at least one video per day.

•Globally, over 65% of Facebook video views occur on mobile.

•Marketers have followed this trend and are using video to help people discover and learn about their brands. In Q4, Facebook introduced autoplay video ads internationally and during the holiday season, many clients told their stories creatively through video.

•In 2014 Facebook began scaling Instagram ads:

◦In Q4 2014, Facebook rolled out Instagram ads in Australia and Canada.

◦Brand marketers across verticals are using Instagram ads from insurance and tech to retail and entertainment.

◦One of the first Instagram video advertisers, Banana Republic developed a series of videos to promote its new BR clothing line; The videos showed fashion sketches from the new collection and drove a 23-point lift in ad recall.

2) Growing the number of marketers using Facebook's ads products:

•The site said it has made it easier for businesses of all sizes to plan and manage their ad campaigns and for small businesses to use its targeting tools:

•Travel company Thomas Cook used custom audiences in Belgium to target past customers with travel destinations they’d expressed interest in.

3) Making ads more relevant:

•Continue to make great progress improving ad relevance and measurement.

•Facebook made significant investments in both its core measurement and targeting tools as well as Ad Tech:

◦Earlier in 2014 Facebook introduced ad buying capabilities based on reach and frequency metrics, which is similar to how brand marketers buy TV ads and therefore enables better cross-comparison

◦Improved its Ads Manager product to give better insights into ad campaign’s audience and impact

◦Re-launched Atlas to help marketers reach real people and measure results across multiple devices, and partnered with Omnicom and Havas to further expand globally

◦Invested in Audience Network, which helps marketers extend their campaigns off of Facebook, and LiveRail, which provides publishers with video tools to monetize their inventory more efficiently

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