We watched closely at Glow as Facebook posted their Q4 12 financial results last night, which, amongst other interesting trends, showed a 40% increase in revenue to $1.59bn during the period. Clearly, Facebook’s monetisation muscles are beginning to twitch. On the earnings call Mark Zuckerberg made a strong indication about a continued investment in product development, with a specific focus on products that make money. As we go further into 2013 those twitching muscles will start to flex.What does this mean for advertisers? It is proof that Facebook is strong on mobile – Daily Active Users (DAU) here exceeded web DAUs for the first time. In line with this, their revenue on the mobile platform represented approximately 23 percent of their total ad revenue for the fourth quarter; up from 14 percent during the third quarter of 2012. News feed formats and mobile app installs contributed to this growth. It’s important to note this is largely from a standing start – their mobile monetisation strategy only began in earnest mid last year.
Additionally the focus is on repeatable revenue. Much has been said about more concentration on solving direct response advertiser’s problems – as once they have cracked this, it’s a repeatable revenue model rather than individual, short term campaigns for brand advertisers. And if you’re effective, DR leads to an uncapped budget opportunity as long at you deliver the right ROI metrics.
What else can we expect as we go into 2013? Well, a lot more complexity in their ad products. Firstly the new graph search will become an emerging player in paid search and will bring with it a rise in the number of deep Facebook integrations. Those companies that have a close integration on the Facebook platform will be given prominence in the results purely because the quality of information feeding the engine is better – and this means a better service for the user. Secondly, I expect more dominance across formats and outside of Facebook. As their inventory is filled with more advertisers, supply becomes a problem. Other than increase this organically with things like additional ad slots or more rotation, which threatens the user experience, the clearest answer is to extend beyond their own ‘walls’ – the much prophesised distributed network offering, or Facebook AdSense.
For Glow, we’re building the scale and capacity to deal with these opportunities when they arise, and remove the complexity from the buy side through more effective automation.