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How Facebook plans to develop and monetize its new products

Puneet Sikka

Facebook looks to develop new ad products for future growth (Part 2 of 4)

(Continued from Part 1)

The mobile advertising market will see strong growth

In the previous article of this series, we discussed how rapidly Facebook (FB) has grown its share of mobile advertising market. In this article, we’ll discuss the Facebook’s future prospects and how its new products could play an important role in the company’s growth. According to a report from Gartner, the global mobile advertising market will grow from $13.1 billion in 2013 to $41.9 billion by 2017 at CAGR (compound annual growth rate) of 34%. Seeing this strong future growth, no wonder most Internet players such as Google (GOOG), Yahoo (YHOO), LinkedIn (LNKD), and Twitter (TWTR) have increased their presence on mobile.


Video ads will see the highest growth in the overall mobile advertising market

According to the same report, although display formats will make up most the overall mobile ad revenue, video ads will see the highest growth.

Facebook’s management commented, “We also have been in early conversations with some clients about what would be a CPM autoplay video ad and in terms of the expectations for that, we really want to see autoplay video ads be something that’s pretty common in the newsfeed experience based on consumer usage before we push very hard in the ads business. So we remain, long term very excited, we do expect that product, demand to premium product but as I said in my remarks, we won’t see a material contribution from it this year.”

Instagram monthly active users pass 200 million

Two years back, Facebook acquired Instagram for $1 billion. During these two years, Facebook managed to grow its monthly active users from 22 million to 200 million. However, Facebook said that it’s still in the early days of developing and monetizing this product.

Facebook’s management commented, “I think that shows that just as people engage with consumer pictures on Instagram, they’re going to engaged with the right pictures from marketers. That said, we’re very focused on consumer growth and we move slowly and deliberately in monetization. So, we don’t see the need or the urge to ramp this as quickly as we possibly could but really want to grow it slowly, grow it deliberately and continue the growth on the consumer side and a great returns for marketers.”

Facebook’s launching a mobile ad network to improve its ad relevancy

Facebook has been striving hard to improve the relevancy of the ads it shows to its users. Improving ad relevancy not only helps marketers grow their business but also improves Facebook’s ad click-through rates.

Facebook’s management explained, “On the ad network, we are in very testing for mobile ad network. We do see a big opportunity here. We think because we’re people based, we have an opportunity first to provide greater reach for marketers and developers who are working with Facebook across other platforms, but also improve the relevance of the ads people see both on and off Facebook. And I think that has been our core advantage and will continue to be. That said, it’s really early days and we’re on the early testing phase”

Continue to Part 3

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