Facebook reaps big from digital advertising


Facebook announced a 52pc increase in quarterly revenue as it sold more ads targeted at a fast-growing number of mobile users, sending its shares up 13 per cent in after-market trading.

Facebook’s dominance in mobile advertising helped to allay Wall Street concerns over its heavy investments in messaging service WhatsApp and virtual reality unit Oculus, which have not yet generated profits.

If mobile advertising on Facebook’s core social networking service is starting to take off, then the company is already preparing the next platforms for its mobile expansion. All but two of the top 100 advertisers on Facebook have also advertised on Instagram, according to Sally Sandberg Facebook’s COO.

Total revenue rose to $5.84bn from $3.85bn a year earlier, with ad revenue increasing 56.8pc to $5.64bn in the holiday shopping period, when spending on advertising typically spikes.

Excluding some items, the company earned 79 cents per share. Analysts on average had expected earnings of 68 cents per share and revenue of $5.37bn, according to Thomson Reuters.

Apart from focusing on mobile, Facebook has been ramping up spending on what it calls “big bets,” including virtual reality, artificial intelligence and drones to connect the remotest parts of the world to the Internet.

Chief Executive Mark Zuckerberg, who returned from two months of paternity leave on Monday, has said virtual reality represents the next major computing platform.

In January, Facebook began taking orders for a consumer version of the Oculus Rift, a head-mounted virtual reality unit.

The company has also begun monetizing some of its other units, such as photo-sharing app Instagram, which surpassed 400 million users last year and began selling ads in September.

Facebook said mobile ads accounted for 80pc of total ad revenue in the quarter, compared with about 78pc in the third quarter and 69pc a year earlier.

Facebook’s service is not available for users in China but it can sell ads to companies there.

Facebook said it had 1.59 billion monthly active users as of Dec. 31, up 14pc from the end of 2014. Of those, 1.44 billion used the service on mobile devices, an increase of 21pc.

Analysts had expected the company to report 1.58 billion monthly active users, with 1.43 billion accessing the service through smartphones and tablets, according to market research firm FactSet StreetAccount.

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