With Mobile on Lockdown, Facebook Looks to Big Bets for Growth

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Shares of Facebook (NASDAQ:FB) surged higher in pre-market trading after reporting strong first-quarter results. Revenue of $2.50 billion was up 72 percent on the year and beat the mean analyst estimate of $2.36 billion. Top-line growth was driven by an 82 percent year-over-year increase in advertising revenue to $2.27 billion, accounting for 96 percent of total revenue. Payments and other fees of $237 million were up 11.3 percent on the year.

Within advertising, Facebook continued its effective monetization of mobile traffic. Mobile advertising accounted for 59 percent of of total advertising revenue, up from 30 percent in the year-ago period, when the question of whether or not Facebook would crack the mobile ad code was still paramount. Now, the point is moot. Facebook’s mobile ad monetization is on its way to matching its mobile usage. Mobile monthly active users (MAUs) of 1.01 billion, up 34 percent on the year, or about 79 percent of total users.

Facebook’s success in mobile is not only evident in its internal numbers — market research firm eMarketer calculates Facebook’s share of the total mobile ad market at 17.5 percent in 2013, up from just 5.4 percent in 2012. Moreover, eMarketer forecasts Facebook’s share of the total market to increase to 21.7 percent in 2014, placing it leagues ahead of Twitter (NYSE:TWTR), which claimed 2.4 percent of the market in 2013 and is expected to claim 2.6 percent in 2014.

Better yet, eMarketer projects that total mobile Internet ad spending will increase 75.1 percent in 2014 to $31.45 billion, and by 45.8 percent in 2015 to $45.85 billion, eventually reaching $94.91 billion in 2018. This enormous growth in overall spending makes Facebook’s market share all the more valuable.

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