News Column

Facebook Sees Revenue Growth, Wants to Be Ad Giant

May 22, 2013

Barbara Ortutay

facebook mark zuckerberg

Facebook was supposed to be our IPO, the people's public offering.

Facebook, the brainchild of a young CEO who sauntered into Wall Street meetings in a hoodie, was going to be bigger than Amazon, bigger than McDonald's, bigger than Coca-Cola. And it was all made possible by our friendships, photos and family ties.

Then came the IPO, and it flopped. Facebook's stock finished its first day of trading just 23 cents higher than its $38 IPO price. It hasn't been that high since.

Even amid the hype and excitement surrounding Facebook's May 18 stock market debut a year ago, there were looming doubts. Investors wondered whether the social network could increase advertising revenue without alienating users, especially those using smartphones and tablet computers.

The worries intensified just days before the IPO when General Motors said it would stop paying for advertisements on the site. The symbolic exit cast a shroud over Facebook that still exists. Facebook's market value is $63 billion, some two-thirds of what it was the morning it first began trading. At about $27 per share, the company's stock is down roughly 30 percent from its IPO price.

Despite its disappointing stock market performance, the company has delivered strong financial results. Net income increased 7 percent to $219 million in the most recent quarter, compared with the previous year, and revenue was up 38 percent to $1.46 billion.

The world's biggest online social network has also kept growing to 1.1 billion users. Some 665 million people check in every day.

And much has changed at Facebook in a year. Facebook began showing mobile advertisements for the first time just after the IPO. In the first three months of 2013, Facebook generated $375 million in revenue from mobile ads, about 30 percent of its total ad revenue. That's impressive given that Facebook had no mobile ads at all just a year ago. It launched a search feature in January and unveiled a branded Facebook smartphone in April. The company also introduced ways for advertisers to gauge the effectiveness of their ads. Even GM has returned as a paying advertiser.

Now, Facebook is looking to its next challenge: convincing big brand-name consumer companies that advertisements on a social network are as important - and as effective - as television spots. A recent Nielsen analysis found that consumers are 55 percent more likely to recall "social ads" than traditional online ads.

"We aspire to have ads, to show ads that improve the content experience over time," Facebook CEO Mark Zuckerberg said. "And if we continue making progress on this, then one day we can get there."

Originally published by BARBARA ORTUTAY Associated Press.

(c) 2013 Tulsa World. Provided by ProQuest LLC. All rights Reserved.




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Source: Copyright Tulsa World 2013


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