After dropping more than 50% since the IPO, Facebook’s market cap restarted growth following Mark Zuckerberg’s on-stage interview at TechCrunch Disrupt. The company closed today with a 7.62% increase in its share price. Several factors could have lead to this fortunate turn of events but the keywords are: mobile, social search, photos and iOS integration.
Facebook’s focus on mobile
On stage, Mark Zuckerberg made it very clear that Facebook is focused on mobile growth. A very bold statement, probably targeted at investors that so far have had their fair share of drama, was “On mobile we are going to make a lot more money than on desktop”.
Facebook has more than 488 million mobile users and the numbers are growing fast, due to increase in smartphone and mobile internet adoption. Recently the company introduced new ways for advertisers to target mobile users through sponsored stories. The advertisers were not so fast to switch to mobile ads, however: although mobile revenues are estimated at about $72 million this year, the figures are below Twitter’s estimates.
This situation is sure to change as Facebook’s focus seems to follow the mobile trend.
Probably the most important thing Zuckerberg mentioned was the fact that Facebook now serves 1 billion search results per day, “without even trying”. To put that in perspective – that is 10 times the number of Bing searches and approximately 30% of Google’s searches. Imagine that – 30% of the world’s largest search engine.
With social input Facebook search can potentially deliver better results than Google. After all, Google is not really good at answering questions but rather locating information. Facebook users usually ask their friends for help on different issues and this type of behavior creates a huge pool of data Facebook can use to answer questions in a very efficient way. Even “without trying”, Facebook has recently started monetizing its searches through contextual ads.
Facebook and Instagram Photos
Zuckerberg mentioned that there is no hidden agenda in Instagram’s acquisition. They want to help the app grow and so far they increased exposure by 1100%.
Photos seem to be a very important area in future Facebook development. Although it’s obvious that photos have a positive psychological effect on users and increase revenue through photo-page delivered ads there is probably something that we don’t know yet.
iOS is the most popular mobile operating system on the Internet, with an astonishing 65.27% of all mobile internet users. Today Apple announced several news, including the long awaited iPhone 5, the new iPod touch and some social features based on Facebook and Twitter social relationships.
Having been integrated in the world’s most popular OS means big exposure for Facebook. Even more – it means an increase in revenues.
As I mentioned a few days ago Apple and Facebook were planning and started rolling out a deeper iTunes integration. Although Facebook is just starting monetizing its mobile users, Apple is one of the best at this game. Using Facebook’s social features Apple can sell even more, bringing a new stream of revenues for both companies.
It seems as though George Soros knew what he was doing when he purchased Facebook stocks…