The mass-market transition to mobile devices was completely transformative for Facebook (NASDAQ:FB). As recently as the third quarter of 2012, the social network's advertising revenue from mobile devices was $0. But in Facebook's most recent quarter, mobile represented about 84% of the company's total ad revenue, amounting to a whopping $7.2 billion. Even more, the catalyst is still raging. Mobile advertising revenue was up 80% year over year.
Just imagine if Facebook was on the brink of yet another powerful catalyst like this. Well, according to Facebook CEO Mark Zuckerberg, it is. And it's called mobile video.
"I've said before that I see video as a mega trend on the same order as mobile," Zuckerberg explained in Facebook's fourth-quarter earnings call. "That's why we're going to keep putting video first across our family of apps and making it easier for people to capture and share video in new ways."
Given how transformative management believes this opportunity will be for Facebook's business, it's no surprise that the social network is quickly executing on this fast-growing frontier.
Earlier this week, Facebook said it is rolling out new ways to watch video on mobile devices, including enabling sound on News Feed videos, vertical video optimization, the ability to watch videos while scrolling, and the announcement of a Facebook video app for TV.
The features extend Facebook's ambitious move toward video and follow up on management's "video first" strategy across its family of apps as the company continues to try to make it easier for people to consume and share video. Before these new features for video started rolling out this week, Facebook was aggressively pushing Facebook Live and recently introduced a new video tab on the Facebook App. Going forward, Zuckerberg indicated in Facebook's fourth-quarter earnings call that the company would even get into original content:
Finally, we're looking for ways to grow the ecosystem of video content on Facebook. We want people to think of Facebook as a place for interesting and relevant video content from professional creators as well as their friends.
An efficient and effective investment
Facebook investors should be glad to see the company moving quickly on this opportunity. While the sheer addressable market of marketers' budgets for TV ads is one reason to be bullish on the investment, it's also worth noting that Facebook's investments in video can scale across multiple platforms. Video is growing in importance not just on Facebook, but on the company's messaging apps and Instagram.
For instance, in Facebook's fourth quarter, management said 400 million people now use voice and video chat on Messenger every month. Further, Facebook's WhatsApp just gained the ability to make video calls. And Instagram's 2016-launched Stories product, which easily integrates videos into a daily "story" for followers, is arguably Instagram's most successful product launch since its inception, garnering 150 million daily active users in just five months after its launch.
A catalyst like this will be particularly important for Facebook in 2017, since management has said its year-over-year growth in ad load should level off in the second half of the year, causing the company to lose one of its major catalysts for growth. Could Facebook's aggressive move toward mobile video help make up for stalling ad load growth?