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Despite Bad Apps, Facebook Is Making Billions Off Mobile

How is this possible?

Michael Cruickshank
Despite Bad Apps, Facebook Is Making Billions Off Mobile© 2017 Flickr - Andreas Poike / Facebook

Facebook has, for the longest of times been the market leader when it comes to social networking, but now things are changing. Or so we are told. Facebook is reportedly bleeding younger users, to new direct messaging apps like Snapchat, while at the same time losing ad revenue as users move to mobile devices.

To combat this, the company has tried to respond, first by buying competitors, like Whatsapp and the failed attempt to buy Snapchat, and then releasing its own in house apps. These applications however are yet to make any serious impact. First there was Paper, a Flipboard-style social media news aggregator which despite lots of good press, no one really used. Now in the last two months, Facebook has followed with Slingshot, and app which was described as a high-profile clone of Snapchat. While official figures are hard to come by, Slingshot too seems to be off to a lackluster start, with users seemingly preferring to stay with Snapchat.

With this in mind, it might then come as a shock, that Facebook has just announced huge profit increases. In the last quarter, the company saw a 138% jump in total net income to $791 million. What's more this revenue was driven by strong growth in mobile advertising, which now accounts for approximately 60% of all ad revenue.

But how has this been possible?

Rumours of Facebook's demise have been greatly exaggerated.

Primarily, it would seem that rumours of Facebook's demise have been greatly exaggerated. While it is true that the social network has lost some users in the teenage demographic, it has nonetheless continued to increase its overall user base. In the past year, the number of users on the site has increased 14% to a total of 1.32 billion users. This increase has largely been concentrated in developing countries, especially in Southeast Asia.

In addition to this increase in users, Facebook has actually been making considerable headway when it come to mobile advertising. Through the roll-out of its new ‘Audience Network’ the company has been working on ways to display Facebook-powered ads outside of the actual Facebook app. In addition, they have been successful with their integration of auto-playing video advertisements, which marketers are willing to pay a premium for.

Clearly Facebook is far from a has-been in the tech world. While it remains to be seen how the company will leverage acquisitions such as WhatsApp and Oculus VR in order to generate a profit, the company clearly still has an edge when it comes to leveraging advertising. Don’t sell your shares just yet...

 

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