Facebook (NASD: FB) has had a good year in nearly every measure. While many investors worried if the tech firm would ever be able to monetize it’s operation or succeed in the increasing mobile use of the user base, the firm has quickly transformed itself into a mobile ad giant, and the success thus far might just be the tip of the iceberg.
Up to a year ago, the majority of Facebook users accessed the site through the laptops and home computers, making advertising rather easy for the firm. As the user base has transformed into being even more dependent on their mobile devices of smart phones and tablets, the firm has had to reinvent how it reaches the users and places ads in such tiny, but valuable real estate. Well, it seems they’ve figured it out.
Remember when Facebook admitted it wasn’t making a penny off its mobile users? Just one year after finally launching mobile ads, the company is on track to capture nearly 16% of the market in 2013. That’s triple the global mobile ad market share Facebook controlled last year, according to eMarketer, a firm that publishes research on digital marketing. In a report published Wednesday, eMarketer said Facebook is taking the market by storm and far outperforming the firm’s earlier estimates. Facebook’s accomplishment is even more striking when taking into account that the social network’s mobile ads raked in exactly $0 in 2011 — that is, they didn’t exist. Their focus and efforts have paid off, with Facebook reporting in May that mobile accounted for 41% of the company’s total ad revenue in the second quarter. Facebook shares are finally above their $38 IPO price, nearing $42 earlier this week.
Meanwhile, Facebook is still far outmatched in global mobile ad market share by No .1 Google (NASD: GOOG). EMarketer expects Google will notch a 53.2% share of the market in 2013. Facebook also has plenty of room to grow in the overall digital ad market, which combines mobile with desktops and laptops. The continued growth in ad revenue can fuel the firm to greater heights, and they will then be able to use that cash flow to continue to grow and develop the firm. Being so dependent on ad revenue leaves a firm in a tenuous situation, as marketing dollars can swell and dry up just as quickly. The small penetration rate it currently has indicates a huge upside potential, but the firm will need to balance that with investing in organic growth as well.
