Facebook earnings show messaging is the way to profit

April 23, 2014
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With their earnings call today, Facebook announced the typical myriad of financial statistics. A giant increase in both revenue and profit carry the day, but additional news from their various entities more than suggest their direction. When it comes to Facebook and the user, the message is clear: messaging is their new direction.

 

Mark Zuckerberg announced during the earnings call that Facebook Messenger has 200 million users, which should only increase considering their having separated the service from the app proper. Taking Facebook Messenger and encouraging forcing users to adopt it as a standalone app will only ensure a better portion of their now one billion users take advantage.

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WhatsApp, a recent acquisition for Facebook, noted yesterday that they have 500 million users. Another growing user base, WhatsApp can be counted as a Facebook entity, just as Instagram can. The photo-centric service said last month they had 200 million users. Again, those numbers are climbing, meaning Facebook currently has nearly one billion people messaging via their various platforms on mobile — again, a number that will only climb.

This dovetails into a few other interesting quips we picked up today about Facebook’s direction. CEO Mark Zuckerberg noted they choose which apps to monetize based on those important user numbers above. Essentially, if an app has 100 million users, they’ll place ads or otherwise find a way to get a bit of cash from users, much like WhatsApp and their $0.99/year price tag.

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Facebook’s ad revenue numbers from last quarter are also interesting. According to their earnings call, 59% of their total ad revenue was via mobile. That 59% represents almost double their Q1 2013 mobile ad earnings, where 30% of ad revenue came form mobile ads.

That takes us to their numbers, where Facebook finds they have over one billion daily active users via mobile, and 1.28 billion total. The 1.01 billion users are those on Facebook’s app/service proper, and have nothing to do with WhatsApp, Instagram, or Facebook Messenger.

When you parse the data out, what you’re left with is Facebook brilliantly double-dipping. They’ve managed to split services into apps, or at least resist cobbling them into one massive experience. Doing so allows them to appreciate one billion monthly active users on their proper mobile app, then turn around and count many of the same users on various other apps/services. Facebook turned one billion into roughly two billion.

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Facebook also has’t monetized their various messaging services yet, so they’re really only tapping half of the potential. If the benchmark for monetization is 100 million users, that’s been accomplished across each of their messaging apps. Facebook has now created four unique, impressionable apps or services with which to sell ads. Rather than have us dive into Facebook proper, we can migrate across apps. That provides a better experience for us (we don’t have an overwhelming experience), but also allows Facebook to quadruple the ad space they can sell.

If you’re still keeping track, Facebook essentially turned one billion people into two billion users — then created four different places to sell ads. While we can’t assume each Facebook mobile user has or uses their other services, crossover trafficking is probably very low — and if it’s not, that’s an even more impressive reach. Even if WhatsApp is right, and ads are never shown on their service (doubtful), Facebook's parsing of services is nonetheless impressive, and will likely continue as Facebook's Creative Labs division starts accelerating development. Maybe we should call Facebook the social ad network from now on.

Source: Facebook


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