Mobile Squared: Facebook's annual mobile advertising revenue may exceed $1.2 billion

On February 18, 2012, according to the latest forecast from British market research firm Mobile Squared, once Facebook starts publishing advertisements on mobile devices, the company will be able to generate more than $1.2 billion in revenue each year from mobile advertising business.

Mobile Squared's revenue is estimated to be limited to the total revenue of Facebook in the United States and the five largest mobile advertising markets in Europe - the United Kingdom, France, Germany, Italy and Spain. If you look at the global market, its revenue figure will be even higher. In addition, Mobile Squared also expects that after Facebook launches mobile device advertising, it will be able to earn about $6.50 per mobile user per year, which is $2 more than it currently earns from each web user.

Although Facebook does not yet launch advertising on mobile devices, it does not prevent the outside world from making bold guesses about how much revenue the company can generate from mobile advertising once it implements this strategy.

According to estimates by Nick Lane, chief strategist at Mobile Squared, Facebook has 185.3 million mobile users in the six markets with the largest number of mobile users (i.e. the six markets mentioned above). It should be emphasized that although Facebook's mobile user distribution seems to have a "long tail" phenomenon, the number of mobile users in the six largest markets still does not reach half of the company's total mobile user base of 425 million.

Although statistics from market research firm comScore show that the average mobile user spends 24 hours per month on Facebook, for the sake of research, Lanny assumes that the average mobile user spends 12 hours per month on Facebook.

Lanny pointed out that it takes about 20 seconds for a mobile app to push a new ad, that is, a new ad is played every 20 seconds. He calculated that Facebook's CPM (cost per thousand) is $0.25, and he also referred to the CPM data of other social networking sites - their prices range from $0.10 to $50.

Based on this, it can be calculated that of the $1.2 billion in revenue that Facebook can earn from mobile advertising business in the above six markets each year, the revenue from the United States accounts for about half, about $653.7 million; the revenue from the United Kingdom is about $166.6 million, the revenue from France, Germany and Italy is about $100 million each, and the revenue from Spain is about $70 million.

Lanny said that although revenue from other markets, especially emerging markets such as Turkey, Brazil and Indonesia, will not be small, the CPM in those markets is not stable, so he did not add the relevant data to the statistics of the six major markets. However, he estimated that Indonesia currently has 30 million Facebook mobile users, Turkey has 20 million Facebook mobile users, and Brazil has about 26 million Facebook mobile users.

Although Lanny did not study those mobile advertising formats, there are rumors that Facebook will initially display ads through sponsored ads rather than traditional display ads. Therefore, it is unclear whether this advertising format will affect the traditional CPM statistics.

According to Lanny, another survey conducted by Mobile Squared for a mobile marketing company found that only 10% of mobile users are willing to accept brand companies to advertise on Facebook, while the other 90% of mobile users are disgusted by it. If the current click-through rate of mobile ads is only 0.5%, Lanny expects that "the click-through rate of Facebook mobile ads will be lower."

There are also some issues that need further research. For example, on Facebook, how much value does a user's "liking" of a brand have? Lanny gave an example: "Coca-Cola has 36 million fans on Facebook, but what does that mean to the company?"