Facebook looks to develop new ad products for future growth
Facebook looks to develop new ad products for future growth (Part 1 of 4)
Facebook sees significant opportunities to develop newer products
Market Realist recently published a series on Facebook’s (FB) Q1 2014 earnings, Why Facebook shows strong growth but the stock is still expensive. We discussed how Facebook’s strong revenue growth of 72% versus Q1 last year easily beat Wall Street expectations. Here, we’ll discuss Facebook’s long-term prospects. During the company’s conference call to announce earnings, Facebook’s management commented that it sees significant opportunities to develop newer products like premium video ads, ads on Instagram, and ads on Facebook’s recently launched ad network. However, the company doesn’t expect any meaningful contributions from these projects this year.
Facebook’s share in the mobile advertising market is expected to grow to 22% this year
Although Facebook doesn’t see any meaningful contributions from newer products, eMarketer expects Facebook to continue to gain share in the mobile advertising market. As the above chart shows, Facebook and Google (GOOG) accounted for the majority of mobile ad market growth worldwide last year. Google is the leading player in this market, with a share of about 50% in 2013, although its share declined about 3% from 2012. However, Facebook showed the rapidest growth, with its share increasing from 5.4% in 2012 to 17.5% in 2013. The report predicts that Facebook’s share will increase to about 22% this year, while Google’s will continue to decline. The chart shows that Twitter (TWTR), Pandora (P), YP, and Millennial Media (MM) are smaller players in this market.
We believe that with the development of newer products, Facebook could continue to gain share in the mobile advertising market in the foreseeable future. In the next article of this series, we’ll discuss in detail each of Facebook’s new product initiatives—video ads, Instagram, and Facebook’s mobile ad network.
Browse this series on Market Realist:
