Facebook recently announced its quarterly earnings, and the results were certainly not what doom and gloom analysts had predicted. With $1.81 billion in revenue, the social network exceeded expectations. Analysts had anticipated a quarterly revenue figure of approximately $1.62 billion based on Facebook’s past ad performance.
The large increase in revenue has largely been attributed to Facebook’s new mobile advertising platform, which allows advertisers to bid on mobile impressions. While Facebook’s standard advertising platform has achieved fairly mediocre CPM rates – the rate per 1,000 ad impressions – the mobile ads are performing very well.
Facebook closed on Friday trading at $34.36 – a significant increase from its pricing over the last few months, although still below its IPO price. Despite trading at over 149 times its earnings, the company has been viewed as a rosy long-term prospect because of its excellent mobile advertising income.
However, some analysts have voiced their concerns about Facebook’s mobile ads, claiming that the numbers reported by the company aren’t completely in line with the reality of the platform. An anonymous financial blogger claims that many of the clicks on Facebook’s mobile platform are accidentally made by smartphone users.
Given the large size of Facebook’s mobile ads relative to the screen – they take up a far larger amount of space than the company’s 100×72 desktop ads – the theory has a reasonable amount of logic behind it. Others in the advertising industry claim that Facebook’s mobile ads rarely convert users into customers, and that current results are not indicative of the platform’s long-term value to advertisers.
Facebook has faced accusations of poor advertising performance in the past, with a number of high-profile advertisers including General Motors reducing their spend on the platform. Despite the raised estimates of many investors, time will show the true value of Facebook’s advertising service.