Facebook Surprise: Revenues Up 32%

If you’ve been following the CEM blog at all, you probably know all about the fears many investors and analysts have about Facebook. Its stock price has basically been cut in half since going public in May. Many critics were concerned that the company would not be able to generate revenue from its ever-increasing mobile users. For quite some time their fears were proving true as Facebook showed few signs of improving matters on their own.

Then we started to see a lot of creativity come out of Facebook. I wrote about their new want feature, promoted posts, and Gifts program. These, combined with some other small changes, looked like great ideas to increase revenue without overwhelming or ruining the user experience. It turns out they have also been good changes for Facebook’s revenue.

Earnings Reports Positive for Facebook

Late yesterday, Facebook had its second earnings report since going public back in May. What’s the news this time around? It’s good. According to NBC News, Facebook’s “revenue jumped 32 percent in the third quarter, beating expectations.” That’s a jump from $954 million to $1.26 billion in one year! This is exactly the sort of earnings report that Facebook needed to convince investors that their formula works and they are capable of making changes.

One analyst in the NBC News article stated, “We’re still seeing stable and good growth.” I remember a few months ago reading a lot of doom and gloom stories about the future of Facebook. I suppose that isn’t the case anymore. Now Facebook simply needs to keep this up and improve upon their strategy.

All-important Mobile Advertising Revenues

Consumers are increasingly utilizing smartphones and other mobile devices to access the web and their social media platforms. There were concerns early on that Facebook wouldn’t be able to keep up with the shift, or make any money from it. The earnings report yesterday put those concerns to rest for now. Akexei Oreskovic for Reuters writes, “Mobile ad revenues totaled roughly $150 million, up from an estimated $40 million to $50 million in the second quarter and almost nothing in the first.”

That means Facebook has managed to triple its revenues from mobile advertising in three quarters! The changes they’ve implemented and the focus on mobile is obviously having an impact on their bottom line. In fact, the company shares jumped 13% in after-hours trading after this earnings report was released and analyzed. Investors must be happy.

Even Mark Zuckerberg weighed in on the mobile issue, calling it a “myth” that Facebook was unable to make money from mobile users. Facebook and investors should be feeling good after this earnings report. It’s especially sweet as competitor Google, and its latest earnings report, failed to impress.

Moving Forward

Facebook still has some problems, but they appear to moving in the right track. Finally. They must be feeling elated that the changes they have made appear to be working. The verdict is still out on how profitable gaming on the social platform will be, especially since the largest company involved, Zynga, has been taking some hits lately. At the very least, it looks like Facebook has gotten its house in order and is positioning itself to be the company investors were hoping it would be when it went public.

Social media continues to expand and adapt to the changing web environment. Having a presence or advertising on Facebook and other platforms as a business can do a lot for you. When done right, it can improve your brand image, expose potential customers to your company, and improve sales. If done poorly, it will be a waste of time. But when it comes to the internet, Facebook has proven that all it takes is some innovative changes and you can be right back in the game.

Is your business active in social media? Do you think Facebook will be able to continue this sort of growth

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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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