360° Coverage : Facebook And App Install Ads

2 Updates

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...

Filed under: news

 
 
 

24 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
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (New ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedi ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

China stocks open higher
Beijing, Oct 20 (IANS) Chinese stocks opened higher Monday with the benchmark Shanghai Composite Index opening at 2,346.05 points, up 4.87 points, or 0.21 percent.
 
 
US defence department to create medical team for Ebola
Washington, Oct 20 (IANS) The US Department of Defense said Sunday the military is creating a 30-member team which will be tasked with providing emergency assistance in case of Ebola virus infection in the country.
 
 
Israel's Tamar gas field to sell gas to Egypt
Jerusalem, Oct 20 (IANS) Israel's Tamar gas field announced Sunday they have signed a bid to sell at least five billion cubic meters of natural gas over three years to private consumers in Egypt.
 
 
Liberian president calls for global support to fight Ebola
Monrovia, Oct 20 (IANS) Liberian President Ellen Johnson Sirleaf Sunday called on the international communities to join the country to fight the Ebola virus disease.
 
 
 

Latest from the Network

Bush shoe-tossing painting hits record at Doha auction
Doha, Oct 15 (IANS/EFE) A controversial painting by Iranian artist Mahmud Obaidi, depicting an Iraqi journalist throwing shoe in 2008 at then US president George W. Bush, was sold for $62,500 at a Sotheby's auction in...
Read more on Celebrity Balla
 
US offers $45 mn bounty for eight terror leaders
Washington, Oct 15 (IANS) The US said Tuesday it is offering rewards totalling up to 45 million dollars for information on eight key leaders of the Al Qaeda in the Arabian Peninsula (AQAP) terrorist organisation. The...
Read more on Politics Balla
 
UNSC extends peacekeeping mission's term in Abyei
United Nations, Oct 15 (IANS) The UN Security Council (UNSC) has renewed the mandate of the UN peacekeeping mission in the Abyei border region between Sudan and South Sudan. In an unanimously adopted resolution, the...
Read more on Politics Balla
 
Ebola cases in West Africa could reach 10,000 per week: WHO
Geneva, Oct 15 (IANS) The World Health Organisation (WHO) has warned that the Ebola epidemic in West Africa could reach 5,000 to 10,000 cases per week by the first week of December. "Quite frankly, ladies and...
Read more on Business Balla
 
Turkey, Singapore sign strategic partnership agreement
Ankara, Oct 15 (IANS) Turkey and Singapore have signed a strategic partnership agreement to boost economic, political and cultural cooperation, as well as security collaboration, during the official visit of...
Read more on Politics Balla
 
Christina Aguilera is returning to 'The Voice' USA
Christina Aguilera will return to 'The Voice' USA next year. The 'Your Body' hitmaker, who previously shared a rotating spot on the judging panel with Shakira, has been replaced by Gwen Stefani this season as she is...
Read more on Celebrity Balla
 
Kesha's music producer hits back
Kesha is being countersued by her record company boss, Dr. Luke. The 41-year-old music producer, who runs Kemosabe Records, claims the 27-year-old 'Tik Tok' singer is a liar and is trying to extort him after she accused...
Read more on Celebrity Balla
 
Jason Derulo won't get back together with Jordin Sparks
Jason Derulo insists his split from Jordin Sparks is permanent. The 'Talk Dirty' hitmaker, who recently ended his relationship with the 'No Air' singer after three years of dating, has ruled out getting back together...
Read more on Celebrity Balla
 
Josh Groban feels 'very lucky' to be dating Kat Dennings
Josh Groban feels ''very lucky'' to be dating Kat Dennings. The 'Brave' hitmaker was very nervous before singing in front of the '2 Broke Girls' actress for the first time at the Carousel of Hope Ball in Beverly Hills,...
Read more on Celebrity Balla
 
Australian Richard Flanagan wins 2014 Man Booker prize
London, Oct 15 (IANS) The first Man Booker prize to allow American nominees was Tuesday night won by an Australian, with Richard Flanagan triumphing for a novel of love and war that tells the harrowing stories of...
Read more on Celebrity Balla