Facebook could make $300 million per quarter from its mobile ads, according to a research note from J.P.Morgan analyst Doug Anmuth, and mobile revenue could eventually exceed that of its existing desktop revenues.Almost all of Facebook’s ad revenue — $872 million in Q1 2012 — currently comes from its desktop display ads and “Sponsored Stories,” which appear in users’ News feeds. Facebook only recently added mobile-only advertising options for clients.
Anmuth believes that mobile will eventually overtake desktop as a revenue source for Facebook, in much the same way it has at Pandora:
Advertisers will be able to display ads for other mobile apps that users may be interested in based on their current mobile app usage, in contrast to Sponsored Stories that enable advertisers to amplify user preferences and activities. Facebook could potentially charge advertisers every time an app is installed on a user’s mobile phone, and the eCPMs could be well ahead of existing advertising.
As indicated in our June 27 initiation report, we are bullish on Facebook’s mobile monetization potential and we believe mobile ad revenue per user could exceed that of existing desktop levels, driving mobile ad revenue of $300M+ per quarter at some point within the next year as higher pricing and visit frequency offset fewer overall impressions. Beyond positive early returns on mobile Sponsored Stories in the News Feed, location-based advertising could also drive greater mobile ad traction.
Disclosure: The author owns 30 shares of Facebook stock.
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