Facebook’s Desktop Ad Revenue Grew Only $69M In Q2, Mobile Rev To Outpace Desktop By EOY 2013

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Facebook stunned yesterday with its report that mobile advertising represented 41 percent of its total ad revenue in the second quarter of 2013. In the first quarter of 2013, it totaled a then-hailed 30 percent, bumping that key ratio by more than a third in just a fourth of a year. On a dollar basis, Facebook’s mobile advertising grew more than four times as much as its desktop-sourced advertising incomes in the most recent quarter.

However, looking backwards, last quarter’s mobile ad growth is less astounding when placed into context. From the third to fourth quarter of 2012, Facebook juiced its ad revenue as a percentage of total ad income by 9 percent. From the last quarter of 2012 to the first quarter of 2013, growth was 7 percent. Taking into account the 11 percent gain reported yesterday, Facebook has averaged 9 percent growth in its mobile ad revenue as a component of its larger ad top line for the past few quarters.

This allows us the ability to make basic predictions. Facebook yesterday noted on its earnings call that mobile advertising revenues will eventually outstrip desktop ad income. But when? Well, we can predict. If mobile advertising revenues continue at their average rate of the past few quarters, Facebook should earn precisely as much from desktop and mobile advertising platforms in the current quarter.

The math is simple: Facebook ended the most recent quarter with a 41/59 split between mobile and desktop ad income. If mobile revenues are growing by 9 percent quarterly – again, on average – 41 and 9 make 50, leaving the remaining 50 percent for desktop ad revenues.

Adding another 9 percent to Facebook’s mobile ad revenue as a percentage of its total ad income, and we could wrap the year where the second quarter finished, but in reverse, with mobile revenues comprising 59 percent of total ad income, and desktop just 41 percent.

This feels, prima facie, optimistic. Are we being too generous?

There is always a risk in any form of prediction, as future market dynamics are outside of our vision, and will always remain so. That said, we can take mild refuge in the fact that our average rate of mobile ad growth, again as a percentage of Facebook’s total advertising top line, is under the most recent quarter’s rise; this means that we are anticipating Facebook to under-perform its most recent quarter moving forward.

This gives us some breathing room in our predictions. Here’s the chart:

If mobile revenue is so strong, where does that leave desktop advertising incomes? Well, as it turns out, Facebook’s desktop advertising business is all but not growing. We can deduce this by subtracting the percentage of Facebook’s mobile ad revenue from its total advertising income, leaving us with its desktop-sourced figure. Let’s have some fun:

  • Facebook’s total advertising revenue was $1.25 billion in the first quarter of 2013. Of that, 30 percent came from mobile. That means 70 percent came from desktop sources. Seventy percent of $1.25 billion is $875 million.
  • Facebook’s total advertising revenue was $1.60 billion in the second quarter of 2013. Of that, 41 percent came from mobile. That means 59 percent came from desktop sources. Fifty-nine of $1.60 billion is $944 million.
  • $944 million – $875 million = $69 million. That, assuming that Facebook has its numbers in place, is the delta between Q1 and Q2 for Facebook’s desktop advertising business.

That’s not much. Not only is Facebook sourcing a growing percentage of its revenue from mobile platforms, but its revenue growth is increasingly coming from a smartphone near you.

Let’s get to the bottom of the final number: In dollar figures, how much did Facebook’s mobile ad revenue grow from the first to second quarter? I’m glad you asked. Let’s find out:

  • Facebook’s total advertising revenue was $1.25 billion in the first quarter of 2013. Of that, 30 percent came from mobile. Thirty percent of $1.25 billion is $375 million.
  • Facebook’s total advertising revenue was $1.60 billion in the second quarter of 2013. Of that, 41 percent came from mobile. Forty-one percent of $1.60 billion is $656 million.
  • $656 million – $375 million = $282 million.

So, Facebook’s mobile revenue grew by a quarter billion dollars in the second quarter. Not bad, given that as a percentage gain it works out to around 75 percent. And, perhaps more importantly, the $282 million figure is more than four times our previous $69 million sum. Therefore, mobile ad revenues on a dollar basis grew four times as fast as desktop advertising incomes in the most recent quarter.

Mobile-first, indeed.

Top Image Credit: Randy Lemoine

Darth Vader and the “Clockwork Orange” Guy Do Facebook Updates (Video)

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While you kind of feel badly for them, James Earl Jones and Malcolm McDowell manage to still look classy in the new Sprint commercials, in which they emote on a phone call and, in another, on Facebook updates for someone named Jenna.

“I think I see you. Nope, wasn’t you,” booms Jones, who has most memorably been the voice of Darth Vader in the “Star Wars” films, among other big roles.

“Now, I’m by the tools … now, I’m by the linens,” responds McDowell, who once starred as Alex in the movie classic, “A Clockwork Orange.”

Ah, well:

Facebook to Remove Messaging From Mobile Apps, Force Download of ‘Messenger’

Facebook Messenger

Facebook is taking its standalone app strategy to an extreme new level on Wednesday. It’s starting to notify users they’ll no longer be able to send and receive messages in Facebook for iOS and Android, and will instead have to download Facebook Messenger to chat on mobile. In an on stage talk I did with Mark Zuckerberg in November, the EO revealed an explanation for today’s change that Facebook’s PR team referred me to: “the other thing that we’re doing with Messenger is making it so once you have the standalone Messenger app, we are actually taking messaging out of the main Facebook app. And the reason why we’re doing that is we found that having it as a second-class thing inside the Facebook app makes it so there’s more friction to replying to messages, so we would rather have people be using a more focused experience for that.”

Read the full story at TechCrunch.

Twitter’s Mobile Apps Begin to Look a Bit More Like Instagram

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Continuing its trudge toward becoming a more media-centric service, Twitter on Tuesday announced a new version of its iOS and Android mobile applications, giving more prominence to photos and video in the stream.

Instead of needing to click through to see an attached photo in your Twitter timeline, now users will see previews of pictures and videos captured with Vine within the stream as they thumb through it.

It’s a simple yet logical move for the microblogging service, which until now has primarily been relied upon for text-based updates in real-time. With the rise of Instagram over the past few years, users have flocked to more visual platforms, preferring to thumb through images and videos.

The move comes as Twitter aims to broaden its appeal to users, only weeks before the company makes its public debut on the New York Stock Exchange. While practically ingrained into the mainstream media consciousness, Twitter’s user growth rate has slowed year over year; the company is home to around 230 million monthly active users, far short of Facebook’s billion-plus member network.

Not to mention the obvious appeal to advertisers, which will receive more prominent billing in the Twitter feed when including pictures and Vine videos within their tweets. (Digiday’s take on this is good.)

Facebook’s acquisition of Instagram did not help matters for Twitter. The microblogging network was in fierce competition with Facebook to acquire Instagram just a few years ago, but lost out to a last-minute billion-dollar offer directly from CEO Mark Zuckerberg.

As a result, Instagram later rescinded the ability to preview its photos from within the Twitter stream, requiring users to click an extra link in order to reach the Instagram shots. Not only was it annoying for users, it was a blow to Twitter, which lost a great deal of rich visual content.

Shortly after Twitter received the heads-up late last year that Instagram would cut off its integration, the company scrambled to figure out a solution to bringing filters into the Twitter app itself, according to sources familiar with the matter. To do that, Twitter contracted the services of Aviary, an outside company responsible for much of Twitter’s photo filter product.

Twitter certainly learned from the whole situation. What you won’t see are previews of photos uploaded from nonTwitter products; only photos uploaded via Twitter’s apps and services will show up in preview form. Same goes for Vine videos (but not for YouTube videos). No word on whether that will change in the future.

Expect the download to roll out for Android and iPhones on Tuesday.

About Those Google+ User Numbers …

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Since its inception, it has been tough to tell just how well Google’s social network, Google+, is doing. Every time Google+ releases a new set of user number statistics, their accuracy and methods are almost immediately called into question.

According to information released on Thursday, it seems that skepticism was well warranted.

Take Amir Efrati’s Thursday morning story on Google+, which called into question the 300 million active, “in the stream” user visits Google+ recently claimed it received each month.

As Efrati wrote, citing anonymous sources, and Google confirmed to AllThingsD, the “stream” is more broadly defined than one would think. It also means clicking on the little red bell or share icons you see across all of Google’s properties.

Quoth Google, in a statement to AllThingsD:

“Yes, clicking on the notifications bell does count in our monthly actives metric for the Stream. If you click anywhere which leads to the Stream being loaded and displayed, we count you as viewing the Stream. The Stream is rendered on mobile (Android and iOS), on the Web at plus.google.com, and when you click and open a notification view of the Stream on desktop properties.”

To be fair to Google+, yes, you can still reach and use Google+ from all other Google sites. Click the bell when you’re in your Gmail account screen and you’ll indeed be presented with a small, stream-like view of Google+ content. It’s possible that people are sharing from there.

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And what’s more, competitors like Facebook also define monthly active users fairly broadly. The numbers include people who use third-party website widgets to share – the “Like” or “tweet” buttons you’ll see on sites like ours, for instance.

The problem is, as Google presents it, we can’t tell if users actually intend to use and share on Google+, or if they’re just clicking on the notifications bell to get rid of it – glaring red and bright against the plain white and gray background of Google’s properties.

So this leaves us, the critics and skeptics, back at a bit of a loss. Perhaps there are a significant number of people actively using and sharing on Google+ from other Google-owned sites.

Or perhaps it’s as dead as lots of people like to joke it is.

We just don’t know. And until Google decides to break down specifically how and from where people are visiting “the stream,” I doubt we’ll ever really have a notion of the network’s health.

Could Google or Tencent Beat Facebook to Buying Snapchat?

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Right now, Snapchat is having its “belle of the ball” moment.

The mobile messaging service – which lets users exchange photos and video that disappear after a few seconds – is being courted by Facebook. It has long been an app that CEO Mark Zuckerberg lusted after.

Thursday afternoon brought another turn of the screw. Valleywag reported that Google could also possibly be considering taking a run at Snapchat, matching Facebook’s $3 billion to $3.5 billion offer. Google and Facebook aren’t commenting, but sources said that Google has indeed expressed some interest in a deal. Tencent, the Chinese consumer Internet company, has also been eyeballing the company, according to sources.

I don’t know Snapchat’s fate, and from what I’ve been told, Snapchat CEO Evan Spiegel himself is unsure of it. But it got me thinking – whether they’re in the running or not, which companies are most likely to go after the fast-growing Snapchat?

Let’s go down the list.

Facebook:
Zuckerberg wants Snapchat bad. So bad, in fact, that he tried – and failed – to clone the app outright. Sources familiar with the matter have described the Facebook CEO as “obsessed” with Snapchat and the idea of ephemeral messaging. They told AllThingsD that he has made multiple offers to acquire the company, some for more than the $1 billion he paid for Instagram last year.

Likelihood: Very High

Google:
Google may have Google+, but it knows it can’t hold a candle to Facebook or even Twitter when it comes to social mobile apps. Buying Snapchat could give Google immediate overnight relevance in social, while simultaneously dealing a blow to Facebook. Not to mention that $3 billion is a pittance for the highly profitable company to spend on an acquisition.

Likelihood: High

Tencent:
This is a good fit. Spiegel has described Tencent as a “role model” for Snapchat in terms of revenue models – potentially alluding to in-app purchasing possibilities for the startup.

And Tencent is indeed interested – if not in a full acquisition, then at the very least in a large strategic investment.

Likelihood: Very High

Yahoo:
A dark horse, and at this point not an entrant as far as I’ve heard. Still, CEO Marissa Mayer has the cash to make the deal, and is no stranger to acquisitions. Plus, an acquisition of Snapchat could help to both bolster Yahoo’s mobile efforts – which are lacking – and burnish its less-than-cool image – sort of like buying Tumblr did.

Still, there’s no evidence to my knowledge that Yahoo has approached Spiegel or Snapchat about a potential acquisition.

Likelihood: Unlikely

Twitter:
After long considering killing off its direct-messaging feature entirely, Twitter woke up last year and figured out that people actually love sending private messages. Another satellite app acquisition – similar to the one it did with Vine – could make sense.

Problem is, the figures being thrown around for Snapchat now are way out of Twitter’s price range. They’re nearly double the amount the company just raised in its initial public offering. At this point, Snapchat is far too rich for Twitter’s blood.

Likelihood: Not at all likely

A caveat to many of the past week’s stories on this topic: It’s possible – if not likely – that the escalating prices and number of companies involved is largely due to jockeying from Snapchat insiders who stand to make hundreds of millions on the deal. Read each new report with that in mind.

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Another thing to remember: Spiegel intends to raise yet another round of funding for his company at a hefty valuation. If another round goes through, there will likely be a secondary component to it, in which Spiegel and co-founder Bobby Murphy could sell some of their own shares and cash out. That means the two could still continue to go for broke and build out their own company rather than sell to the highest bidder, while having the insurance of already having taken some money off the table. And according to multiple people close to Snapchat, Spiegel and Murphy very much want to build out the startup into a full-fledged company.

Bottom line: If Snapchat keeps growing – and sources said that is indeed the case – Spiegel isn’t under the gun to make a decision today. If all goes well, his acquisition offers – and the high prices they command – likely won’t disappear.

Judge Approves Class-Action Facebook Privacy Settlement

A U.S. Northern District Court of California judge approved the settlement of a class-action lawsuit against Facebook on Monday, which claimed that Facebook’s “Sponsored Stories” product shared users’ “Like” data with friends without the ability to opt out. Facebook will pay out $20 million to members of the suit as a result of the settlement. “We are pleased that the settlement has received final approval,” a Facebook spokesperson told AllThingsD.

Facebook is testing Twitter-like trending topics on its News Feed

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Facebook is testing Twitter-like trending topics and some users can find it on their News Feed. As reported by the Wall Street Journal, a section module will appear at the top right-hand side of the News Feed displaying popular topics being discussed. Each listed topic is based off of hashtags, which the social network started supporting in June.

It’s unknown whether this new feature will ever see the light of day as some items that Facebook tests eventually get shuttered. A company spokesperson told WSJ, “Right now it’s only available to a small percentage of US users and it is still in the early stages of development.”

Facebook Tests “Trending” Section in News Feed (WSJ)

Photo credits: Justin Sullivan/Getty Images, Facebook Trending Topics via The Wall Street Journal