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Facebook has put more detail on its fears that the transition to mobile usage may hurt its revenue growth.
Generally, mobile ads are cheaper than display ads, and they compete for advertisers with web ads. The additional supply and lower price can have the effect of reducing the number of dollars advertisers spend overall. That scenario, in fact, appears to be happening at Google right now and happened at Facebook in Q1.
Facebook addressed that factor in its 10-Q filing with the SEC for Q2 2012.
The company said more than half its 955 million users accessed Facebook via a mobile device in the quarter. It also said the number of desktop users was flat, and in the U.S. has gone into a decline. That means those users are increasingly only seeing Facebook on mobile devices. In fact, 102 million people are mobile-only Facebook users.
The problem is that Facebook's mobile ad revenue is currently running at around $182 million a year—a fraction of its nearly $1 billion in quarterly revenues.
Put another way, Facebook's biggest growth platform, mobile, has the least ad revenue coming off it, which is what appears to have spurred the new detail in the 10-Q. Here's the verbatim text of it. (We've added emphasis and paragraph breaks to make it easier to read):
Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results.
We had 543 million MAUs who used Facebook mobile products in June 2012. While most of our mobile users also access Facebook through personal computers, we anticipate that the rate of growth in mobile usage will exceed the growth in usage through personal computers for the foreseeable future and that the usage through personal computers may continue to decline in certain markets, in part due to our focus on developing mobile products to encourage mobile usage of Facebook.
For example, the number of daily active users (DAUs) using personal computers was essentially flat, and declined modestly in certain key markets such as the United States and Europe during the second quarter of 2012 compared to the first quarter of 2012.
We believe increased usage of Facebook on mobile devices has contributed to the recent trend of our DAUs increasing more rapidly than the increase in the number of ads delivered.
We have historically not shown ads to users accessing Facebook through mobile apps or our mobile website. In March 2012, we began to include Sponsored Stories in users’ mobile News Feeds; however, in the first half of 2012, we generated only a small portion of our revenue from the use of Facebook mobile products, and our ability to increase mobile revenues is unproven.
If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.
Disclosure: The author owns 30 shares of Facebook stock.
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