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Why mobile-app install ads is a lucrative business for Facebook

Puneet Sikka

Why Twitter introduced the mobile-app install ads program (Part 2 of 7)

(Continued from Part 1)

Mobile-apps install ads driving Facebook’s growth

In the previous part of the series, we discussed Twitter’s (TWTR) introduction of the mobile-app install ads program. Twitter needs to boost its ad revenues more to become a potent player in the mobile advertising market. Mobile-app install ads is a lucrative business for social networks like Facebook (FB) because these ads encourage people using Facebook app to install other apps. During the conference call to announce Facebook’s 1Q14 earnings, the management explained that App Installs have been one of Facebook’s best-performing ad products, driving over 350 million installs to date. Facebook launched this product in January, 2013. It has gained a lot of uptake—over 60% of the top-grossing apps on Apple’s (or AAPL) App Store and Google (or GOOGL) Play use mobile-app install ads.

Facebook now has one billion monthly active users on mobile

Facebook’s strategy for mobile seems to be paying off. It’s still a big driver for the company. Facebook’s advertising revenue from mobile as a percentage of overall ad revenue has consistently increased, from 30% in 1Q13 to 59% in 1Q14, as the previous chart shows. Facebook continues to grow in size and engagement, with 1.28 billion people now using Facebook each month and almost 63% visiting daily. As a mobile company, Facebook continues to reach new milestones with more than one billion monthly active users on mobile devices. Almost 55% of its daily active users only connecting on mobile.

If Facebook’s strategy on mobile continues to pay off, it will benefit exchange-traded funds (or ETFs) such as Social Media Index ETF (SOCL), DJ Internet Index Fund (FDN), and the Nasdaq Internet Portfolio (PNQI) that have high exposure to Facebook.

Continue to Part 3

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