360° Coverage : Facebook And App Install Ads

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Facebook And App Install Ads

Apr 29 2014, 1:51pm CDT | by

Facebook had a great set of earnings it presented last week. They continue to show an incredible financial trajectory which the company has been on for the last 18 months. After stumbling out of the...

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13 weeks ago

Facebook And App Install Ads

Apr 29 2014, 1:51pm CDT | by

Facebook had a great set of earnings it presented last week.

They continue to show an incredible financial trajectory which the company has been on for the last 18 months.

After stumbling out of the gates following their IPO upon concerns that the service would not be able to migrate its user base to mobile, they’ve done just that.

All the while, they’ve not only managed to increase their user base size to well over a billion (1.28 billion), but they’ve also shown an increase in the engagement of their users. In the last quarter, they were able to show that 63% of their monthly active users (MAUs) were also daily active users (DAUs), up from the prior quarter.

They’ve made prescient acquisitions like Instagram, which has grown from 20 million MAUs when they bought them to 200 million today – almost as much as Twitter.

Another engine in the comeback of Facebook is the explosion in advertising revenue.

Their most recent quarter saw ad revenues grow 82% year-over-year.  Mobile accounted for 59% of their ad revenue, up from 53% in Q4.

What’s at the core of this mobile ad revenue?  What’s the secret sauce of Facebook’s recent financial success?

It seems to me that it’s fundamentally a story of app install ads and not banner ads (at least not yet).

On last week’s call, Zuckerberg cited the importance of App Installs – beyond any other type of ad:

On mobile, App Installs has been one of our best performing ad products, driving over 350 million installs to date. Over 60% of the top grossing apps on the Apple App Store and Google Play use Mobile App Ads, which is pretty impressive performance for a product that launched in January last year.

How much do these App Install ads matter to Facebook? We don’t know because they won’t say.

Justin Post of BofA Merrill Lynch specifically about this on the call:

I know you gave us the number of total apps, but maybe how that revenue as a percentage of total, how important it is to you?

Sheryl Sandberg’s response was:

On mobile app ads, we’ve seen really strong adoption and this is a very nascent but growing market. I think people sometimes think that a lot of our mobile ad revenue is coming from this one type of ad and our mobile ad revenue is very broad based.

When management was asked about App Install pricing trends, they said that overall ad pricing was up and that they buyers of App Install ads were not just gamers but more broadly based because “everyone who is building apps on mobile needs installs and we have the number one products out there for delivering that.”

Does this mean that banner ads of Facebook don’t work? No. In her prepared remarks, COO Sheryl Sandberg, used a case study of how Canadian retailer SportChek had seen much better responses on Facebook to their ads than what they experienced with traditional paper circulars.

The relevancy of such ads should continue to grow.  However, I have heard several outsiders make the point that Sandberg referred to in her answer which was that Facebook heavily relies on these App Install ads to drive their revenues.  Those with this view believe that Facebook’s reluctance to share more details about percentage of overall sales made up by App Install ads points to their desire not to draw attention to it.  It’s no different to why Marissa Mayer from Yahoo has not shared details on what percentage of her sales comes from mobile while Facebook is happy to share it.

If it’s true that Facebook does heavily rely on these types of mobile app install ads, there’s nothing wrong with that but they should expect fierce competition from others over time for that business and they’re also vulnerable to if there is a pull back in VC investment into app companies that heavily rely on marketing their apps through Facebook to prove traction.

In summary, Facebook has built an accessible mobile service which has a powerfully large audience that’s very attractive for any mobile app developer.  They’ve smartly capitalized on that to build a thriving business.  It’s probably more important to Facebook than they want to let on to competitors.

It will be interesting to watch how feverishly others try to go after these lucrative types of ads in the coming months./>/>

[Long YHOO]

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat wa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robb ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected b ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hisham ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

8 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 mill ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

8 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 20 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) tod ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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