Facebook revenue increases by 60%, Advertisers unhappy

Written by Nina Thomas

 Facebook has revolutionized the way the average person goes through a normal day.   Posting, commenting, liking and uploading has become commonplace.  But after going public at $38 per share and then dropping to $18, this stock proved to be less successful that anticipated, especially because of such high hopes places on Facebook.  This initial IPO dropped so low that it set a low standard for Facebook as a publicly traded company.  Since this time, Facebook’s revenue has increased by 60%, beating investor expectations.  It is now valued at $48.71.  However, the question now is whether advertisers are satisfied with the way Facebook is positioning their ads to generate such a drastic increase in profit.

This radical increase in revenue for Facebook came after broadening access to its mobile audience instead of focusing primarily on desktops.  Nearly 89% of revenue coming in from Facebook comes from advertisements as of now rising from 88% not too long ago.  Revenue rose from $1,262 in September 2012 to $5,286 in September 2013 (in millions).

Despite this major increase in revenue, hope for Facebook was low at first.  CEO Marke Zuckerberg had waited to make Facebook a public company, “We’re going public for our employees and our investors. We made a commitment to them when we gave them equity that we’d work hard to make it worth a lot and make it liquid, and this IPO is fulfilling our commitment. As we become a public company, we’re making a similar commitment to our new investors and we will work just as hard to fulfill it.”  After announcing its IPO, Facebook was under a lot of skepticism about being able to generate profits from advertising or other forms.  As mentioned earlier, Facebook dropped to $18 and later flattened to $20.  This why an increase to $48.71 is shocking to investors.

This large increase is largely attributed to Facebook changing it advertising strategy.  However, many advertisers are still unsatisfied with Facebook ads compared to other large companies such as: Google, LinkedIn and Twitter.  The reason for this being that many advertisers are unhappy with how their advertisements appear on Facebook pages as well as the number of advertisements.

Much of Facebook’s revenue jumped from 14% coming from mobile sales, to 41% this past year.  This is one reason why Facebook’s stock has performing so much better recently.  This increase in mobile sales also means that many advertisements from advertisers are also shifting from desktop ads to mobile ones.  This shows a shift in Facebook from earning money from desktop computers to mobile phones instead.

With this new quarter of revenue for Facebook, the company is excited about what is still to come.  “The strong results we achieved this quarter show that we’re prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy.” Said CEO Mark Zuckerberg in a statement concerning third quarter 2013 results.

This same stock that was hovering in July just over $25 now rose to $50.23 by October.  “Congrats to the people who had to guts to hang on.” Said Jon Weiner concerning the extreme rise in Facebook’s stock.  Many investors now regret not holding on to Facebook’s stock back when it had dropped.

Now that Facebook’s stock is in a good place, they continue to make changes and implement new things.  Facebook has recently showed how advertisements will be looking like on Instagram, spreading its influence even farther.  The question now is whether advertisers will be satisfied with the advertisements available on Facebook and Instagram.