Where Will Facebook Go From Here?
Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Facebook CEO Mark Zuckerberg did what a true CEO would have done, he admitted to the fact that Facebook's biggest mistake was wasting two years by not focusing on smartphones and tablets. In the past two years the usage of mobile and tablets for browsing the internet and being active in social networks has gone above and beyond PC usage. Facebook did not monitor this major turn of events and now they're forced to play catch up. Facebook was able to create a one of a kind website for PC users, but sadly they did not notice the fact it was their relatively weaker website (Facebook mobile) that was actually entertaining a larger crowd.
So what did Facebook miss out over the past two years?
Well for websites like Facebook (NASDAQ: FB), twitter and Google (NASDAQ: GOOG) their primary source of income is obviously advertisement. Well this year Twitter was able to fetch a total $129.7 Million while Facebooks first year of Ad-campaigning was able to generate a total of $72.7 Million, both of these figures are from the US market alone. Where Facebook has missed out is the fact that this number does not actually do justice to what facebook is capable of actually generating. E-marketer's estimate a total of $2.61 billion this year from advertisements in the US market alone, compared to this figure Facebook has a lot of catching up to do keeping in mind the amount of users active on websites like Facebook.
Google and Pandora (NYSE: P) are the Major giants when it comes to fetching revenue from online advertising. Well how is Pandora doing? The answer to that question is actually pretty tricky. Pandora's music streaming service is a sensation. Pandora was able to generate revenue of $83 million from February to April this year, well over the $74 million prediction of the analysts. This specific service has reported over 50 million users logging in at least once a month to listen to music. Despite of all this the parent company Pandora Media is facing a net loss of $20.2 million this year. Pandora has never had a profitable year solely because of the fact that though they generate a significant amount of money through ads they've always ended up paying more when it comes to royalties. Pandora is set to finish second this year behind Google as far as revenue from online advertisements are concerned.
Google survives purely on online advertisements, a staggering 96% of Google's $36.1 billion revenue in 2011 came from online advertisements alone. Google Adwords and Adsense have literally redefined the fundamentals of web search. Every search now has its own related Ads, this concept has made Google the company it is right now. Giants like Amazon have spent $55.4 million on Google Ads in 2011, this alone signifies how even well reputed companies rely on Google for their marketing. The travel and tourism industry has spent $2.4 billion in 2011 for Google Ads. Figures like these are the reason why Google is at the top as far as revenue from Ads on the Internet are concerned. Google's acquisition of YouTube has only helped the company further.
Facebook reports 950 Million+ users online a day whereas Twitter has roughly 500 Million+. Despite these figures, twitter seems to be doing better, why? This is purely because of the fact that Twitter was able to venture into the mobile market well ahead of Facebook. As of now Facebook is ready to take on the mobile market, they still have a lot to do with regards to redesigning the website and customizing signature apps for mobile devices. Analysts predict that Facebook would definitely do better in the next year generating $387 Million in the US market through mobile Ads. By 2014 Facebook revenue would be set at $629.4 million vs Twitter's $444.4 million, Analysts predict these figures monitoring the changes Facebook are making for the mobile market.
Facebook's mobile ad campaign even though it is in it's baby stage has kicked off very well. From the figures mentioned above it is very clear about the fact that mobile ad revenue is going to be what drives Facebook's revenue. Microsoft and Apple have both introduced Facebook in their OS, this signifies the amount of importance companies are giving to the social networking revolution. Facebook's stock price has been growing considerably in this quarter, this is due to their mobile ad venture. Analysts have predicted the mentioned figures keeping in mind the scope of mobile ads. If all falls in place we could see Facebook shares heading far north from today's levels. Why? Because Facebook has the potetnial to become the second highest earner when it comes to Internet advertisements right behind Google.
Interested in More Analysis?
After the world's most-hyped IPO turned out to be a dud, most investors probably don't want to think about Facebook. But The Motley Fool has outlined some things every investor needs to know about the company in a new premium research analysis. Access your report by clicking here.
ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and Google. Motley Fool newsletter services recommend Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
