Technology


Facebook set to report 36% sales jump in Q1


The company is giving marketers more options to court the growing number of users who socialise on mobile devices. Photo — Bloomberg file picture

San Francisco: Facebook, the largest social-networking service, is making headway in its push to boost sales by giving advertisers more ways to reach people who share photos and status updates over wireless devices.

The company is projected to say first-quarter revenue jumped 36 per cent to $1.44 billion, the average of analysts' estimates compiled by Bloomberg. Profit before certain costs is predicted to be 13 cents a share.

A year earlier, the company had earnings of $205 million, or nine cents, on sales of $1.06 billion.

Facebook's shares have already risen for eight straight trading days as investors grow more optimistic about demand for its advertising tools, including services for reaching members on handsets and tablets.

The Menlo Park, California-based company is giving marketers more options to court the growing number of users who socialise on mobile devices and the Instagram photo application, shifting away from Facebook on desktop computers.

"It's becoming much more of a professional media platform," said Martin Pyykkonen, an analyst at Wedge Partners Corp. in Greenwood Village, Colorado. "There's more depth and breadth to what they're offering. It's not perfect. It's not like they've figured everything out."

Mobile's contribution

Of its 1.1 billion global users, about 680 million access the service monthly with smartphones and tablets, meaning results from mobile platforms will be closely watched. Mobile contributed 23 per cent of total ad revenue in the fourth quarter, up from 14 per cent in the third quarter.

Growing Concerns about Facebook's ability to make money from mobile users helped push the stock down in the months after the share sale to a low of $17.73 in September. Now, the company is benefiting from mobile-ad products it rolled out last year, including ways for companies to highlight their promotions as users scroll through the News Feed. During the first quarter, the company expanded the frequency of ads members saw on smartphones and tablets, according to Spruce Media.

Based on the application's rapid growth to 100 million users, Instagram may now be worth about $2 billion, according to Michael Pachter, an analyst at Wedbush Securities Inc. in Los Angeles. The service, which appeals especially to adolescents who are too young to have a Facebook account, had less than 10 million users a year ago. That puts it ahead of other popular social Web services such as review site Yelp and Pinterest, according to ComScore.

That growth makes Instagram the platform that offers Facebook the biggest untapped opportunity for mobile-advertising revenue. Still, part of the attraction of Instagram, which lets users crop, filter and post photos to friends and followers from a smartphone, is its lack of marketing messages — meaning that adding promotions poses the risk of a user backlash. Though Facebook hasn't given a time frame for when it will offer advertising on Instagram, analysts say it's a matter of when, not if. "I actually don't know why they have waited so long to start offering advertising," said Debra Aho Williamson, an analyst at New York-based EMarketer.

Likewise, Instagram ads will have to engage users with pictures that resemble friends' updates, said Rob Jewell, founder and chief executive officer of Spruce Media, which helps companies market themselves on Facebook. "I would expect to not see those ugly two-text-line ads," Jewell said. "It's going to be a very similar format to what a current Instagram post looks like."

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