With the euphoria surrounding Facebook’s IPO now fading, investors are taking a closer look at what they paid top dollar for. Many research shops have pulled back the sky-high projections for social media spending on Facebook that they issued earlier this year. This change may have marketers wondering what’s really happening with this format.
Last year, Facebook’s ad revenues research $3.154 billion. eMarketer now expects the firm’s ad revenue to reach $4.232 billion this year and $5.478 billion in 2013. These levels mean that advertising as a percentage of total revenue for the firm will fall from 98% (back in 2009) to 83% (in 2013). Earlier this year, eMarketer had predicted ad revenues at Facebook would reach $5 billion for 2012.
eMarketer analyst Debra Aho Williamson says, “Major marketers are still questioning the effectiveness of advertising on Facebook, and they are concerned that their ability to measure results is underdeveloped.” Williamson also signals her confidence that Facebook has infrastructure and automation in place to help ads in the social media space “perform better.”
In the meantime, CEO Mark Zuckerberg gave additional insight into his company’s focus for the future and it’s all about mobile. The 3 reasons mobile matters to Facebook for the next few years are:
- More users access Facebook on mobile than on desktop
- These users have higher engagement rates and times on mobile
- Facebook believes it can earn more on mobile users than on desktop
Zuckerberg also hinted that Facebook will exploit search opportunities in the social media environment as well. All of this should lead marketers to realize that social media may be a work-in-progress platform. Digital ad space providers are battling to gain market share as they seek to replace traditional media formats. In doing so, the lines between social, mobile and search may blur.
To learn more about Facebook Users, check out the Audience Interests&Attitudes Report available on the Ad-ology store.[Sources: eMarketer Reduces Estimates for Facebook Revenue. Emarketer.com. 30 Aug. 2012. Web. 14 Sept. 2012; Thomas, Owen. Mark Zuckerberg Speaks. Businessinsider.com. 11 Sept. 2012. Web. 14 Sept. 2012]