Why is Mark Zuckerberg smiling and what does it mean for you?

Mark Zuckerberg will be full of smiles this month after a stormy year for Facebook looks to be over.

Facebook began selling stock to the public and trading on the NASDAQ on 18 May 2012, but it wasn’t a simple affair. Initially valued at $38 a share, their stock nose-dived within a week to $32 (a 15% drop in the value of the company). By September 2012, Facebook’s shares plummeted further to $17.55. Accusations of exaggerating the price and inadequate disclosure flew thick and fast and the IPO (Initial Public Offering) resulted in a PR disaster for the social media giant.

One year later it seems that the green shoots have emerged. Earlier this month, Facebook announced positive second-quarter results to the applause (and relief!) of Wall Street.

“We’ve made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile,” said Mark Zuckerberg, Facebook founder and CEO. “The work we’ve done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future.”

Highlights from Quarter 2 (2013)

  • Revenue for the second quarter of 2013 totalled $1.81 billion, an increase of 53%, compared with $1.18 billion in the second quarter of 2012.
  • Daily active users (DAUs) were 699 million on average for June 2013, an increase of 27% year-over-year.
  • Monthly active users (MAUs) were 1.15 billion as of June 30, 2013, an increase of 21% year-over-year.
  • Mobile MAUs were 819 million as of June 30, 2013, an increase of 51% year-over-year.
  • Surpassed 1 million active advertisers on Facebook, driven by significant growth in local businesses.

Strong results in mobile advertising certainly won over the critics and gave the competition something to think about. Facebook said last week that its mobile advertising revenue grew 75% in three months, smashing market predictions.

Impressive results this quarter put Facebook within touching distance of the $38 milestone as they traded at highs of $37.96 yesterday (30 July 2013). With the business back on track, it may not be long before they cross the $38 mark.

You may be thinking “this is great news for Facebook, but what does it mean for me”?
Whilst these results only give us an initial peek at the full year’s results, it is the behaviour of Facebook’s customers that I find most interesting. Here is my interpretation:

1. Social media strategy
Facebook has increased user activity on the site (DAUs and MAUs). Not only are there more users, but they are using the site far more regularly than they were a year ago. Increase in usage creates more airtime for businesses wanting to promote themselves and makes Facebook an even more important part of your social media strategy.

2. Catch your customer’s attention
The increase in Mobile MAUs is phenomenal; a 51% year-over-year increase shows a real shift in how and when users access social media. The figures tell us that more users want their social media with them while they are on the move and we can assume that they dip in and out of the ‘news feed’ in short bursts.

That means you have a matter of seconds to catch someone’s attention as they scroll through their news feed en route to the office. Whilst Facebook doesn’t limit you to 160 characters, you might lose vital hits if your message is not eye-catching.

3. Is social media advertising for you?
1 million active advertisers now use Facebook to promote their businesses. The simple fact is, you have some serious competition if social media advertising is important to you.

Social media advertising is in its infancy; even Facebook is still trying to work out how to maximise revenue from it. Use it wisely as it may not always deliver the return you hoped for and isn’t as cheap as it may first appear.

 

Click here for details on Facebook’s financial results for the second quarter ended June 30, 2013.

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