Facebook's Mobile Future Looks Bleak

In a new SEC filing, Facebook noted that 102 million users only accessed the site through a mobile device last quarter, as first reported by TechCrunch.That’s up from from 83 million users in the first quarter, a 23 per cent increase. There are no statistics from prior quarters, unfortunately, but it’s reasonable to think that the number has been growing at a similar rate from a small base. 

Facebook added 54 million new monthly active users last quarter. It appears that 35 per cent of those users are mobile-only.

This trend will only accelerate over the next few years. As Google CEO Larry Page recently argued on the Charlie Rose Show, mobile phones connected to the Internet are going to be “most people’s first computer.” This is especially true in the developing world, where mobile offers a compelling solution to affordable internet access.

facebook arpu

This does not mean that Facebook’s revenues “could plummet” if they don’t figure out how to ramp up mobile advertising, as TechCrunch argues, but it hurts its ability to generate that massive revenue bump that everyone has assumed is just around the corner.As we discussed last week, Facebook is currently generating mobile ad revenue at a $180 million annual run rate from the mobile version of its Sponsored Stories product, which injects advertiser-selected posts into users’ news feeds. That number represents only 33 cents per mobile monthly active user per year (or ~8 cents per quarter), which is leagues below its current average revenue per user, or ARPU. It will undoubtedly rise as deployment increases or Facebook can demonstrate their value.

While there has been some positive evidence of Facebook’s mobile ads’ effectiveness, it hasn’t proven they are a silver bullet either.  But if the developing world comes online increasingly mobile-only, it will hinder the company’s ability to maximise revenue out of its newest users. 

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