Peter Kafka

Recent Posts by Peter Kafka

Facebook’s Ad Business: More People, More Ads, Same Prices

A quick summary of Facebook’s ad business, via its new SEC filing: More people equals more money.

Essentially, Facebook’s ad revenues rose at the same rate as its usage numbers: Over the first three months of the years, its monthly active users rose by about a third, and so did its ad revenue.

Duh. Right? Basically. Except there are a couple points worth noting.

  • Facebook says it hasn’t increased the number of ads it is showing users — presumably a temptation during the runup to an IPO.
  • Overall, Facebook’s price per ad has stayed the same in the last year. But that’s only if you look at a worldwide average. In the U.S and Canada, the social network says it has raised prices. And in Europe, prices are down because of “continuing weak economic conditions in that region.” In Asia and the rest of the world, where Facebook is growing faster, prices are lower to begin with.
  • Facebook also acknowledged, for the first time, that just like (almost) everybody else in the ad business, it sells more stuff at the end of the year. Ad revenue dropped 8 percent from the last quarter of 2011 to the first quarter of 2012. And it showed a similar drop the year before. (The exception to the seasonal drop? You guessed it: Google’s Q4 2011 number was just a touch lower than its Q1 2012 total.)

[Shutterstock/Anton Balazh]


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