Surprisingly, Facebook’s News Feed Ads Aren’t Scaring Away Users

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Facebook’s Revenue Per User In North America Is Now 3-4X Europe and Nearly 6X Asia (But User Growth In Its Cash Cow Is Slowing Down)

Facebook risked driving users away by showing more ads in the news feed last year, but to Mark Zuckerberg’s surprise, a big increase in their presence during 2012 only reduced Likes and comments by 2%. Users are staying loyal, which during the 2012 Q4 earnings call Zuckerberg called a sign of the value Facebook provides.

Whether or not users are clicking or even noticing feed ads, they’re not using Facebook less because of them. While there’s plenty of people who complain about seeing the marketing messages crammed between content from their friends, they seem happy to just skim by rather than closing their app or browser window.

Zuckerberg explained that his company was intently focused on whether more ads meant less engagement. It even expected it, but that hasn’t been the case. Its news feed quality improvements around showing more relevant posts helped increase Likes and comments roughly 50% during 2012. That was only offset by a 2% reduction in engagement due to ads.

That means Facebook might be able to get away with showing even more ads. That could keep mobile revenues growing. This quarter it hit $305 million in mobile ad revenue, counting for 23% of total ad revenue, up from about $150 million and 14% in Q3. The real feat would be if Facebook could make its ads so helpful for discovering apps and products that users who see them actually use the service more.