Facebook reported strong
earnings last week sending the stock up over 16% on the news. Both revenue and profits beat analyst expectations
and investors were pleased to see that 49% of revenue is coming from the
Facebook Mobile platform. This is much
higher than well-established advertising competitors like Google and Yahoo
indicating Facebook’s strength in quickly monetizing the platform.
The key driver in the
revenue growth has been the introduction of news-feed ads- the pesky messages
that interrupt the stream of your friends updates/comments when you open the application
on your mobile device. The reason these
ads have been so popular with advertisers is that companies now have much
better data to support the efficiency of the channel. For example, Facebook has partnered with
Nielsen and Datalogix to help collect loyalty data and to track purchased for
CPG companies. This, in turn, has given
advertisers much better insight into their return on investment and has
encouraged them to increase spend. This
strikes at one of the fundamental issues with investing in the social media
ecosystem- that the metrics to indicate success or failure of a particular
campaign or product are still under development. I
spoke with the Head of Social Media at Vice about this issue and he mentioned
that the standard metrics that are currently used – reach, engagement, etc –
are just a guess at what actually matters.
He mentioned that every day they his team looks at the data to
understand whether they can extrapolate meaningful insights for their
clients. This is both exciting and
frustrating for the marketing community.
Over the next few years, it will be interesting to see whether the power
of mobile has staying power as a major advertising channel, or whether advertisers
will be disappointed with the yield on their investment and put their money
elsewhere.
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