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Why Facebook’s revenue growth is dwindling


There may be a ton of competition in the social platform market at the moment with new entrants Google + and Pinterest making some serious waves; not to mention the likes of Twitter and old stalwart LinkedIn still going from strength to strength. None of this, however, seems to be hurting Facebook ad revenue growth too much.

Jonathan Houston
Jonathan Houston is passionate about digital marketing and digital strategy. During the day, Jonathan is the Head of Digital Marketing for HKLM. Jonathan's work at HKLM includes... More

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In the United States; 6.5% of all advertising revenue will be earmarked for Facebook.

That means that Facebook’s ad revenue in the United States alone will be a little over US$ 2.5 BILLION. Its worldwide total for advertising revenue will come in at around 5 Billion Dollars this year. That is more than 60% growth year-on-year compared to 2011.

There is a trend that will be slightly worrying for Facebook even though it is making massive growth in their advertising revenues; that growth is beginning to slow down. The slow-down in year-on-year growth from 2011 to 2012 is already at 6.8%, and the trend is for this to be an even greater slow down in 2013 and 2014 according to a report by eMarketer.

Facebook is not the only experiencing this trend though. Twitter and LinkedIn are seeing similar slides in their advertising growth numbers. Twitter dropped from a mammoth 233% growth to 83% and LinkedIn changing from 95% to 46%. These numbers equate to 260 Million and 226 Million Dollars in Worldwide advertising revenue respectively.

This is not to say that the social platforms are in for rough waters in the future; it just points to a change in where their revenues are coming from. eMarketer anticipates that in 2011, 85% of Facebok’s global revenue came from Credits and other sources. This same trend could be said to be true for the other social media giants.

The one company that is certainly still placing a lot of weight in its advertising platform as a source of revenue is Google. In an article by TechCrunch Google’s Mobile advertising revenue was tracked and plotted for the previous two years and the following five years. Google’s mobile advertising revenue for 2012 is expected to reach US$5.8- billion worldwide. By 2014 this number is expected to reach US$13.7- billion. Even more significant is the fact that this will account for 21% of Google’s total advertising revenue.

What can we tell from this?
Mobile is very clearly the way of the future.
With no current ability to earn revenue from advertising on a mobile app from Twitter, Facebook or LinkedIn; it is not a huge leap to surmise that this is where their slow-down in growth is stemming from.

Google has expertly crafted their mobile experience to include the AdWords advertising platform and as a result the more that users move towards mobile (I’m including tablets in mobile) the more its revenue will shift as well. This intrinsic link means that they will not see a slowdown in its advertising growth as the transition from desktop ads to mobile ads is seamless!

The rumour mill is rife with talk that Facebook have got some serious plans in the works to mobilise (excuse the pun) its advertising platform. Word on the street is that this will launch in March of 2012.