Facebook in the first quarter made a pair of big bets on the future with its $19 billion acquisition of WhatsApp and $2 billion purchase of virtual reality firm Oculus. For now, though, mobile advertising continues to be the company’s big moneymaker. Ads served on devices made up 59% of Facebook’s ad sales in the first quarter, pushing overall revenue up 72% in the period. That’s up from 63% in the prior quarter. The social networking giant on Wednesday reported an adjusted profit of $885 million, or 34 cents a share -- compared to $312 million, or 12 cents a share, a year ago. Revenue increased to $2.5 billion from $1.46 billion. Wall Street analysts, on average, had expected Facebook to report an adjusted profit of 24 cents a share on revenue of $2.36 billion. "Facebook's business is strong and growing, and this quarter was a great start to 2014," said Facebook CEO Mark Zuckerberg in the earnings release. He acknowledged the company had made some long-term bets on the future while continuing to focus on its core business. The numbers speak for themselves. Facebook’s $2.27 billion in advertising sales surged 82% in the quarter from a year ago -- and from 76% in the fourth quarter. The share of advertising coming from mobile was nearly double the 30% of a year ago, underscoring the social network’s rapid shift from desktop to mobile. Payments and other fees contributed $237 million, down from $241 million in the previous quarter. Facebook said monthly active users (MAUs) as of March 31 increased to 1.28 billion -- up 15% from a year ago, just under the 16% growth in the fourth quarter. The number of mobile MAUs continued to grow much faster -- up 34% to 1.01 billion, helping drive the company’s mobile ad business.Daily active users increased 21% to 802 million. Among other milestones, Facebook-owned photo- and video-sharing app Instagram recently surpassed 200 MAUs. In addition to its eye-watering acquisitions, Facebook in the quarter also formally launched auto-play video ads in the news feed after months of testing. With the format just launched in March, it’s still too soon for the new ad offering to have an impact on the company’s results in the quarter. But in a research note ahead of earnings, JPMorgan analyst Doug Anmuth said he expects the recent rollout of advertising on Instagram and the new video ads should help further accelerate sales growth in coming quarters. Facebook is also expected to soon announce its own mobile ad network. While still well behind Google’s 41%, Facebook accounted for 15.8% market share of all mobile ad dollars spent in the U.S. in 2013, according to eMarketer, up dramatically from 9% in 2012. The research firm estimates that the company’s mobile ad share will grow again in 2014 to 17.7%. As usual, Facebook did not provide any earnings or revenue forecast itself in reporting first-quarter results. After closing at $61.36 on Wednesday, Facebook’s shares were up more than 3% in after-hours trading shortly after it released its earnings report. In addition to its financial results, Facebook on Wednesday also announced CFO David Ebersman, who joined the company in 2009 and oversaw its rocky IPO in 2012, will be stepping down later this year. He will be succeeded by David Wehner, currently Facebook's, VP, corporate finance and business planning.
One of the most popular and longest-lived apps in the Apple App Store gets a major overhaul today as The Weather Channel updates its iPhone app. The radically streamlined design opens with a clean one-tap look at the current local temperature and major stats. And unlike the old paginated layout, the new app is now a continuous scroll through hourly forecasts, major stories, airport reports, pollen counts and a new social feed that collects reports from users. The Weather Channel is promising greater efficiency in the design. The radar screen, for instance, is designed to load faster. In each section of the vertical scroll there is a lateral carousel of addition content that lets the user stop and drill deeper into any category of news and video. The new social Weather feature invites the local user to tap an icon to add their report of the current conditions, and they can even upload an image. The user-generated content is collected onto a map interface. Also included in the feed are airport delays and pollen reports. Also part of the new layout is a prominent native ad format. Inaugural sponsor Kellogg’s was visible on the first day of the new app's appearance. A large square ad unit is inserted into the feed. It may not be coincidental that the new Weather Channel bears more than a passing resemblance to the Yahoo Weather app. Ranked number two in popularity among free weather apps in the Apple App Store, Yahoo’s rival offering arrived last year to much acclaim for a similar simplicity of design, reliance on a background visual and a scrolling interface. The Weather Channel is leveraging its celebrity newscasters and TV muscle to promote the upgrade. A comic promotional video has weatherman Jim Cantore explaining that the new app is “the next best thing to cloning me.” As he walks through the Weather Channel newsroom, his fellow staffers are sporting Cantore’s signature blue rain jacket and bald head.
AOL is joining other big Internet firms, like Facebook and Twitter, in rolling out app download ads. The Web portal on Thursday introduced a native mobile ad unit that will run across its owned-and-operated sites, like TechCrunch and Huffington Post, as well as its network of 20,000 third-party publishers. The in-stream ads are designed to mirror the look and feel of a property’s editorial content on mobile screens, but are labeled as “sponsored.” While initially aimed at publishers and developers to promote their apps, the format will eventually extend to other types of advertisers. “We think there’s probably a better way to advertise to people than a rectangular ad box at the bottom of a smartphone page,” said Chad Gallagher, director of mobile at AOL Platforms. “This is the first launch for native in AOL platforms, on a global, open basis, to solve that problem.” In initial testing over the last four months, Gallagher said the native unit has had about the same click-through rate as traditional mobile banners. The difference has been in post-click conversion rates, with the native ads delivering rates of 6% to 8% compared to 1% to 2% for banners. “Fundamentally, users just engage in a much more significant way when the advertising is more in line with the content they’re consuming,” said Gallagher. Once they get past the click, that is. Early campaigns with more than 50 app developers on AOL sites like Autoblog and DailyFinance have also shown higher revenue per thousand impressions (RPMs). That’s a result of the higher post-click conversion rates the ads drive, according to AOL. AOL says the new ad format at launch has a reach of 86 million monthly users (per comScore data), but how often users see ads isn’t standardized. That will be left up to individual content properties and publishers, Gallagher said. “Even on our own sites, we haven’t figured out the right ratio,” he noted. The ads initially will typically be sold on a cost-per-click (CPC) basis, but a cost-per-download model is also an option. In the coming months, AOL expects to expand the native offering beyond app promotion to advertisers across industry categories in the coming months. Gallagher said AOL is already hearing from “tons of brands” about taking advantage of the technology. By starting with app download ads, AOL clearly hoping to emulate the success of Facebook’s app install ads, which reportedly account for more than half the social network’s mobile ad sales. More recently, other major Internet players like Yahoo, Twitter and Google have debuted their own units for driving app downloads. Like Yahoo, AOL hasn’t been able to capitalize on the huge growth in mobile usage and advertising in the last few years. While Google accounted for an estimated 41% of U.S. mobile ad sales in 2013, and Facebook 15.8%, according to eMarketer, AOL is simply among “other” sites that represented about a third of ad sales last year. Gallagher noted that while AOL is adding a native mobile format, it isn’t getting rid of existing banner and rich media formats like Pictela for devices. “That’s not going away,” he said. During the company’s most recent earnings call, AOL CEO Tim Armstrong said mobile had contributed to its quarterly ad gains.
Competition for biddable ad inventory in mobile heated up significantly last quarter, according to mobile real-time bidding (RTB) ad exchange Smaato. The company on Thursday released its global mobile RTB Insights Report Q1 2014. Smaato noticed a substantial increase in demand during Q1 2014 compared to Q4 2013. The company says the total number of auctions increased by 132% quarter-over-quarter. Additionally, the number of bid responses (demand) increased by 73%. Global RTB spend on the exchange increased 459% year-over-year (Q1 2013 versus Q1 2014) on the Smaato exchange. The largest jump came between Q2 and Q3 of 2013. There was a slight decreased from Q4 to Q1, although ad spend in general typically decreases post-holiday. Last quarter, the U.S. accounted for two-thirds of the spend on Smaato’s exchange, which is exactly how much it accounted for in Q4 2013. Smaato says the UK and Italy were its two largest spenders in the EMEA region, respectively, although neither accounted for more than 7% of total spend on the exchange. Turkey (up 225% quarter-over-quarter), South Africa (up 190%), Brazil (104%), Mexico (88%) and Spain (77%) are highlighted as countries quickly adopting mobile RTB. This was Brazil’s second straight quarter with a triple-digit spend increase over the previous quarter; from Q3 to Q4, spend in Brazil increased 440%. Smaato says interest for app inventory grew considerably in Q1. Globally, the company said there was 73% more demand for in-app inventory, which led to 109% more auctions compared to Q4. Entertainment & Media accounted for 37% of the global spend on the exchange, and advertisers in that category spent 97% more in Q1 than in Q4. Technology & Telecom (24%) and Business & Finance (11%) were the second- and third-highest spending sectors, respectively.
Smartphones are widely used to consume media, but most advertisers have focused on social media, digital video and other applications with a visual component, largely neglecting one of the most common usage patterns: pure audio listening, including Internet radio and podcasts. But a new company, XappMedia, is looking to fill the gap with its launch of the first interactive audio ads for mobile apps, which allow the listener to respond and immediately engage with more content from the advertiser.Xapp announced that it has raised $3 million in seed funding from private investors, which it will use to roll out the service to more publishers and advertisers over the course of 2014. According to Xapp co-founder and CEO Pat Higbie, the company is “focused on new consumer behavior, called ultra-mobile, where the consumer is listening to apps because their hands and eyes are doing something else.” In short, XappMedia’s ad product, XappAds, is designed to reach smartphone users who are listening to content, but unable or unwilling to interact with their phone manually -- for example, while exercising, driving, cooking, or otherwise occupied. The XappAds platform, currently in use by NPR for its mobile app, plays an audio spot and then invites the user to interact by saying a simple audio prompt chosen by the advertiser. The platform supports three basic formats: simple branding (with no interactivity), engagement ads with the option of hearing additional information, and conversion ads that enable the user to take an action like buying the product, calling a brand representative, sending an email, accessing a coupon, or downloading a mobile app. Higbie explained: “We’ve leveraged a combination of cloud, mobile, and voice technology to create this experience and make it scalable. Any listener can adopt it quickly, any advertiser can adopt it quickly, and bigger publishers and advertisers can implement it on a much larger scale quickly if they choose.” He added that XappAds don’t require programming expertise to create, and are compatible with all Internet radio apps as well as news apps and podcasts, as long as they allow a simple plug-in to enable voice responses.
Random iPhone App of the week: Think of the RealPlayer Cloud as a Dropbox for your videos. The free app allows users to privately share videos with friends and family, back content up in the cloud, and watch or download videos onto any device or screen. RealPlayer Cloud is compatible with Chromecast and Roku, so users can watch videos on TV, home-movie style. The app offers 2GB of storage for free and additional storage can be purchased in-app. Download the free app here.
The biggest push for mass acceptance of mobile shopping technologies may have less to do with the technology and more to do with consumer education. Most consumers are either unaware or basically not interested in various commerce aspects ranging from in-store tracking like Apple’s iBeacon to payment technologies like NFC (near field communication), based on a new study. When active mobile app users were asked what they thought of iBeacon, only 10 percent of consumers said they like the possibilities it provides with the majority (69%) of iOS users not knowing what it was. The remaining 21% don’t like the idea, finding it too offensive. NFC payments fared no better, with a majority (56%) not being aware of what it was. Maybe worse, of those who were aware of NFC, only 6% said they use it and 38% do not, based on the survey of 3,000 active mobile phone users conducted by Retale. From an acceptance or usage standing, Google Wallet is in a similar situation. While most Android users were aware of it, 11% use it and 70% do not. The survey also found that mobile shoppers are not so keen about being tracked as they shop. The majority (71%) said they do not want to be tracked, though almost a third (29%) said they would not mind. Consumers seemed somewhat more open to receiving push notifications while in a store, with 44% saying it would be ok, although the majority (56%) said they don’t need them. Part of the lack of usage of such technologies is knowledge that some of these capabilities even exist. Another aspect may be that of those who do know about such technologies, they see no personal reason to use them. Part of the challenge for those charged with deploying these technologies and platforms is to make sure the technology is bulletproof and works seamlessly every time, no small feat in itself. The other part will be to convey to and convince mobile shoppers that their investment in moving to such new methods will be worth their time and effort.
Vserv.mobi, a mobile ad network that has recently repositioned itself as a mobile ad exchange, on Wednesday released some data on the “state of [its] exchange.” Keep in mind this is just one exchange -- and one that has only supported real-time bidding (RTB) for about a month -- but the mini report gives us a good look into the type of growth mobile is seeing. Vserv says that in the past year, its amount of inventory has increased by 82%. The company says 14% of the ads on its exchange are now available for RTB. We can surmise that figure will grow, considering that the company's RTB platform has only been around for a month. Click rates have also risen. The company says there are two times the amount of clicks occurring today compared to one year ago, with Windows phones (18.2 times more) leading the way. Android phones see about four times the amount of clicks compared to a year ago, while Apple and “Others” each have 1.2 times more clicks. The importance of clicks has been debated -- with some saying click rates are all but worthless because of fraud issues -- but I do think it’s noteworthy that the rate at which clicks have grown in the past year has exceeded the rate of new inventory, at least for Vserv. Perhaps the clicks have increased because Vserv says it houses more “premium” inventory today than one year ago, although what qualifies as “premium” in this case is unclear. According to Vserv, the vast majority of the new “premium” inventory comes from outside of the U.S. The company says it has 4% more “premium” inventory coming from North America today than one year ago. However, India has 27% more, Latin America 17% more, the Middle East & Africa 15%, Southeast Asia 14%, and the “rest of Asia” 10%. Europe as a whole has 13% more. Tech and computing-related ads dominate on the Vserv mobile exchange, accounting for 32% of the spend. Hobbies & Interests -- in which games are included -- accounts for 18%. Style & Fashion accounts for another 18%, while Arts & Entertainment sees 15% of the share.