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Facebook: Earnings and Yearnings

Tuesday, 28 October, 2014

Can Facebook keep telling its growth story? The social network reports third quarter earnings this evening and expectations are high. Last quarter it generate revenue of $1.81 billion, a 53 percent increase from the same quarter a year ago and, as The Motley Fool encapsulates it, “shares up 45% in 2014 and nearly 200% since the start of 2013.” While all this is good news for investors, not everyone is thrilled by the rise and rise of the behemoth. Take publishers, for instance.

Their increasing dependency on referral social media traffic and Facebook’s increasing focus on mobile is creating a relationship that’s potentially ruinous. The inability of traditional publishers to create pages that load rapidly on mobile devices has led Facebook to dangle a lure. “One possibility it mentioned was for publishers to simply send pages to Facebook that would live inside the social network’s mobile app and be hosted by its servers; that way, they would load quickly with ads that Facebook sells. The revenue would be shared.” That’s what David Carr wrote in the New York Times on Sunday in a piece titled Facebook Offers Life Raft, but Publishers Are Wary. And so they should be, because attractive and all as this might appear, Carr quickly adds, “Media companies would essentially be serfs in a kingdom that Facebook owns.”

Can this grim fate be avoided? Over at Gigaom, Mathew Ingram follows up on Carr’s article and suggests that salvation might be found in offering readers the things Facebook cannot. Snippet:

“For me, the only possible route to survival (notice I didn’t use the word prosperity or success, just survival) is to play in Facebook’s sandbox, but to give up as little as possible — and at the same time, to spend as much or more effort on figuring out how to make your content as engaging and social as it can be on your own terms. Give readers the ability to do things that Facebook can’t or won’t: the ability to interact with you, to be part of the process… If you hand all of your content and relationships over to Facebook and assume that your work is done, then you have already lost.”

But what if the war has been lost? This chart from Shareaholic shows just how dominant Facebook is in the social media traffic business. We know enough now about its yearnings. They are being powered by its earnings and that’s why this evening’s results are so important.

Facebook traffic


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