Apple has taken the crown for most profitable company in history. BIA/Kelsey Sr. Dir. of Industry Strategy & Insight Abid Chaudhry reminds us that of the 20 most profitable quarters of all time, fifteen were oil companies… the remaining five were all Apple.

Its monster Q1 was the lead off topic in an analyst roundtable today (video below). Apple’s current product picture was characterized by Chaudhry as strong growth potential in Asia where different buying patterns exist. He’s meanwhile bullish on the impending Apple Watch.

SVP and Sr. Analyst Charles Laughlin discussed YP’s latest announcement: the launch of cross-device ad targeting. This is increasingly critical in a multi-device world, and importantly brings the capability –previously celebrated by brand advertisers — down market to YP’s SMB base.

Lastly, I discussed Facebook’s mobile positioning as a preview to its Q4 earnings. The big story was its share of ad revenues that are mobile (it ended up announcing 69 percent). As its usage migrates to mobile, this revenue share is key for it to maintain confidence in public markets.

The full roundtable is below and stay tuned for another roundtable next week that will preview the research reports we are each working on in respective analyst coverage areas.

The post Analyst Roundtable: Apple and Facebook Earnings, YP Goes Cross-Device appeared first on BIA/Kelsey - Local Media Watch.

Dex Media plans to spend 2014 moving past the integration phase that occupied much of last year, and into an execution phase focused on dialing in the right digital product set for small-business advertisers. The result should be an improving trend on digital revenue, and possibly a more stable picture on the print side.

That’s what we inferred from this morning’s Q4 and year end 2013 earnings call. Dex Media executives do not offer guidance, and they largely resisted analysts efforts on this morning’s call to provide any specific revenue forecasts.

What we do know is that the digital results moved in the right direction in Q4, following a negative trend through the first three quarters of 2013. Dex Media reported zero Q3 digital ad sales growth on its Q3 earnings call, culminating a steady declines in online ad sales throughout the year. For Q4, digital ad sales were 5.1%. What accounts for the improvement? Dex Media executives blamed much of the poor performance on the inevitable integration disruption. The improvement is a combination of moving through the bigger integration hurdles while also making some progress on the product and sales effectiveness side.

For the full year, Dex Media generated 24% of its roughly $2.1 billion in revenue from digital, or about US$500 million in online revenue. Print ad sales results stabilized a bit in Q4, but CFO Dee Jones cautioned not to over interpret one quarter. He noted that the mix of markets in Q4 slightly favored better print results. That said, the effect of bundling print along with digital products is expected to have a slight stabilizing impact on print over time. Print ad sales declined by 19.1% in Q4, compared with a 20.6% Q3 drop. In Q4 2012, print ad sales were down 23.3%.

Dex Media CEO Peter McDonald was more focused on the digital opportunity on today’s call, emphasizing the opportunity Dex Media has to make digital simple for small-business advertisers. He noted that with 2,000 local sales reps, Dex Media is well positioned to bring SMBs online at scale, something others have tried and failed to do. When asked about competition, McDonald said the biggest threat is from what he referred to as “that guy,” an informal expression Dex Media has coined internally to describe small local digital consultants and agencies.

“They tend to be good at one or two things, like SEO or social media,” McDonald said of these small local agencies. Dex’s opportunity is to offer a simplified, comprehensive solution for SMBs that includes presence, search engine marketing, social media, reputation management and other solution, with measured performance. “Businesses need us.”

McDonald said Dex Media is constantly trying out new bundles, looking for the right mix that will maximize revenue growth and retention. At the entry level, McDonald said  the company is getting traction with its Start Smart bundle.

Dex Media ended 2013 with about $2.7 billion in bank debt, down from $3.3 billion at the end of 2012. Moving forward, the company plans to use some of its cash to further reduce debt, but when asked, Jones would not rule out making strategic investments, including acquisitions.

The post Dex Media Focused on Digital Growth appeared first on BIA/Kelsey - Local Media Watch.

“A core value for Twitter as a company is to reach every person on the planet. In 2014 we want to build a Twitter that is accessible to everyone,” says Dick Costolo, CEO of Twitter in yesterday’s Q4 earnings call. Twitter reports having has 241 million monthly active users worldwide, up 30% from last year, with 54 million of those users in the United States.

With only 24.9% of U.S. consumers actively using Twitter, according to BIA/Kelsey’s Consumer Commerce Monitor™, it looks like such an expansive reach is going to be a challenge for social media’s newest public company.

To tackle this feat Twitter mentioned several changes it has or will make to stimulate user growth. As Twitter users may have noticed, in-line social actions and media powered timelines were introduced in October which increased user interaction such as favorites and retweets by 34% in Q4. Search is also a quickly growing feature with 120% increase in total search year over year while simpler user onboarding experiences with native mobile signup are aimed to reengage inactive users. Another new feature that was introduced, and is a new concept for Twitter, was direct messaging. Messaging is up 25% since it was implemented.

The main device that users are accessing their Twitter accounts on is mobile. More than 75% of total ad revenue is being generated through mobile devices.

With all of this focus on growing their user reach, we have to ask; what is twitter doing for advertisers? According to Mike Gupta, CFO at Twitter, ad engagement is up more than 600% from the prior year. The increase in ad engagement is a combination of the improved prediction and targeting capabilities by twitter and the realized importance of the native ad by advertisers. Not only that but “for large branded folks, Twitter in TV is much a part of the conversation,” says Gupta “TV ad recall was up roughly 14% or so for folks who are using Twitter.”

For SMBs, there’s an apparent gap between SMB’s sentiments about Twitter and the company’s traction with small business advertisers. Twitter made little mention of SMB advertisers. According to BIA/Kelsey’s Local Commerce Monitor™, 44.4% of local SMBs consider social media to be a very high or extremely high future marketing priority. Not only that, but SMBs are already very heavily engaged on Twitter as users. Nearly 50% of SMB’s have a Twitter account or plan to get one in the next year. Of those who have one, over 78% of SMBs update their Twitter account daily or weekly.

Additional Key Highlights

–Full year revenue is expected to be in the range of $1.15 to $1.2 billion

–Employee headcount is now over 2,700

–International revenue represents 27% of total revenue

The post Twitter’s Q4 2013 Earnings Call: Big Plans for User Engagement, No Plans for SMB Advertisers appeared first on BIA/Kelsey - Local Media Watch.

“A core value for Twitter as a company is to reach every person on the planet. In 2014 we want to build a Twitter that is accessible to everyone,” says Dick Costolo, CEO of Twitter in yesterday’s Q4 earnings call. Twitter reports having has 241 million monthly active users worldwide, up 30% from last year, with 54 million of those users in the United States.

With only 24.9% of U.S. consumers actively using Twitter, according to BIA/Kelsey’s Consumer Commerce Monitor?, it looks like such an expansive reach is going to be a challenge for social media’s newest public company.

To tackle this feat Twitter mentioned several changes it has or will make to stimulate user growth. As Twitter users may have noticed, in-line social actions and media powered timelines were introduced in October which increased user interaction such as favorites and retweets by 34% in Q4. Search is also a quickly growing feature with 120% increase in total search year over year while simpler user onboarding experiences with native mobile signup are aimed to reengage inactive users. Another new feature that was introduced, and is a new concept for Twitter, was direct messaging. Messaging is up 25% since it was implemented.

The main device that users are accessing their Twitter accounts on is mobile. More than 75% of total ad revenue is being generated through mobile devices.

With all of this focus on growing their user reach, we have to ask; what is twitter doing for advertisers? According to Mike Gupta, CFO at Twitter, ad engagement is up more than 600% from the prior year. The increase in ad engagement is a combination of the improved prediction and targeting capabilities by twitter and the realized importance of the native ad by advertisers. Not only that but “for large branded folks, Twitter in TV is much a part of the conversation,” says Gupta “TV ad recall was up roughly 14% or so for folks who are using Twitter.”

For SMBs, there’s an apparent gap between SMB’s sentiments about Twitter and the company’s traction with small business advertisers. Twitter made little mention of SMB advertisers. According to BIA/Kelsey’s Local Commerce Monitor?, 44.4% of local SMBs consider social media to be a very high or extremely high future marketing priority. Not only that, but SMBs are already very heavily engaged on Twitter as users. Nearly 50% of SMB’s have a Twitter account or plan to get one in the next year. Of those who have one, over 78% of SMBs update their Twitter account daily or weekly.

Additional Key Highlights

–Full year revenue is expected to be in the range of $1.15 to $1.2 billion

–Employee headcount is now over 2,700

–International revenue represents 27% of total revenue

The post Twitter's Q4 2013 Earnings Call: Big Plans for User Engagement, No Plans for SMB Advertisers appeared first on BIA/Kelsey - Local Media Watch.

On yesterday’s Facebook Q4 earnings call, COO Sheryl Sandberg reiterated a point she’s made repeatedly, “SMBs are the holy grail of online advertising and a segment that I’ve been particularly focused on throughout my career.” She then noted that Facebook has 25 million active SMBs who are engaged with their Facebook pages monthly. Despite this, Facebook’s real challenge was to upsell more of these SMBs into the active advertiser category. The company made a big investment to simplify its ad products, and that investment is now working to convert these SMBs into advertisers; of new SMB advertisers acquired in Q4 that started with pages, 72% started with Facebook’s most simple ad products.

BIA/Kelsey’s LCM Wave 17™ data shows Facebook pages at 52% percent penetration among SMBs, more than any other media channel used for advertising/promotional purposes. Facebook Ads only have 15% penetration rate, marking a huge upsell opportunity for Facebook. It was made clear on the company’s last earnings call that Facebook sees SMBs ultimately driving big revenues.

In the third quarter, Facebook revealed that mobile ad revenues accounted for 41% of ad revenues, precipitous growth considering that the company had only introduced its first mobile ad product in June 2012. Now, three months later, mobile ads to account for 53% of total ad revenue. The increase in mobile advertising revenue is represented in our LCM 17 data, in which 55% of SMBs said mobile advertising was a future marketing priority.

Another key driver of ad revenue growth continued to be the strong performance of Facebook’s News Feed Ads on mobile and desktop, which helped the company attract more advertiser demand. Mobile ad revenue increased from approximately $881 million in Q3 to approximately $1.25 billion in Q4, a healthy increase that benefited from seasonal effects.

Other Q4 and Annual Earnings Release Highlights:

— Revenue for the full year 2013 was $7.87 billion, an increase of 55% year-over-year.

— Daily active users (DAUs) were 757 million on average for December 2013, an increase of 22% year-over-year.

— Mobile DAUs were 556 million on average for December 2013, an increase of 49% year-over-year.

— Monthly active users (MAUs) were 1.23 billion as of December 31, 2013, an increase of 16% year-over-year.

— Mobile MAUs were 945 million as of December 31, 2013, an increase of 39% year-over-year.

The post Facebook’s Q4 Big Wins: Mobile Ads and SMBs appeared first on BIA/Kelsey - Local Media Watch.

(BIA/Kelsey, Local Commerce Monitor – Wave 17, 2013)

BIA/Kelsey data shows small-businesses are fully embracing Facebook as a media channel. Facebook executives made it clear on the company’s recent earnings call that they see SMBs ultimately driving big revenues for the social media giant.

BIA/Kelsey’s LCM Wave 17 data shows that 54.5% of SMBs are utilizing Facebook page for online marketing. Another 38% say they’re likely to adopt it within the next 12 months.

Facebook COO, Sheryl Sandberg emphasized the company’s commitment to small business on the recent Q3 earnings call. SMBs make up a large piece of the pie at Facebook; 11 million SMBs, 7 million active with a Facebook page and 3 million of them make at least one post per week. SMB Dan Levy announced at the Local Search Association show back in April that 70% of Facebook users are connected to at least one local business page. And in total, there are 645 million monthly views for these pages.

A Comscore/Neustar/15Miles study that showed Facebook has the second largest app usage for local search, behind only Google. Sandberg mentioned again how SMBs are a big opportunity and that they’ve developed products over the past year that specifically target local SMBs. If Facebook can continue to develop ad products that answer the needs of location targeted ads for SMBs, they’ll be in great shape in the coming years to meet our projected demand and growth for the location based mobile advertising market.

Location Based Mobile Advertising on the Rise

(BIA/Kelsey, Local Commerce Monitor – Wave 17, 2013)

Facebook is heading in the right direction to meet its prediction that mobile ad revenues will surpass desktop ad revenues by the end of the year. Currently, already 48 % of its daily active users only use mobile devices while 49 percent of its total ad revenues come from mobile ads. A surprising fact is how fast FB has grown – 0 to 49% in the last 5 quarters.

Facebook ads garnered in nearly $890 million in revenue during the third quarter through the company’s app install ads, mobile engagement ads, and news feed ads. In comparison to Twitter, whose mobile platform ad revenue ratio is the best of social websites at 70%, means Facebook has the right idea investing in their mobile platforms. Sheryl Sandberg said “Q3 total ad revenue grew 66% year-over-year to $1.8 billion and mobile ad revenue grew to 49% of our total ad revenue. This is a remarkable milestone in the short time since [FB] introduced mobile News Feed ads just last year.”

Facebook CEO Mark Zuckerberg also mentioned the company’s recent acquisitions of Mobile Technologies and Onavo. The first is a speech recognition and machine translation company that will help expand FB’s work beyond just photo recognition to voice. The second is a team that builds world-class data compression technology and mobile analytics. Onavo dabbles in a number of areas, including mobile app analytics and measurement for marketers, as well as in a mobile security division. However, its main core competency is data management and compression and we believe that’s what Facebook cares about the most.

With recent mobile engagement and ad revenue numbers still on target with the company’s projection, we envision Facebook continuing to solidify itself as a strong player in the mobile space. We expect to see continued mobile ad revenue gains and larger push for mobile coming from all ranks within the company to meet this growing industry.

The post Mobile Up, Desktop Down: Facebook Focuses on Mobile in a Big Way appeared first on BIA/Kelsey - Local Media Watch.

Facebook investor and press events have become spectacles unto themselves, where distilling signal from noise is a tricky task. But that’s what we’ll flesh out here in the aftermath of the company’s first earnings call post-IPO…a call that featured an appearance from Mark Zuckerberg, nothing overly substantive from Facebook execs and persistent questions about the health of its ads and payment businesses in the mobile environment.

First off, here are the big numbers:

– Revenue for Q2 2012 was $1.18 billion, up 32 percent year-over-year. Unlike the prior quarter, there was no sequential decline in sales. Nearly 84 percent of the pie came from ads (the rest from payments), a consistent breakout with the 85/15 split we first saw in the S-1 filing. ARPU rose to $3.20, level with where it stood at the end of 2011.

– Overall mobile usage (not broken out by geography) is still surging, with Facebook adding 55 million monthly active users (MAUs) in Q2. Desktop usage climbed to 955 million, but the U.S. daily and monthly actives are virtually flat, underscoring the network’s need to more effectively monetize its burgeoning international presence, especially in emerging economies beyond Europe. Facebook’s ARPU in Asia was $0.55, and only $0.44 in the rest of the world. Granted, this is up from $0.37, but still legs well behind the U.S. and Europe. And, as has been documented, many younger economies are heavily dependent on mobile devices.

– Now, let’s unpack the advertising business. As we’ve suggested for many months, Facebook is placing huge bets on its Sponsored Stories ad unit, which leverages organic news feed content by amplifying it into socially-enabled ad units. It’s the unit that is now inserted into desktop and mobile newsfeeds. COO Sheryl Sandberg shared both quantitative and qualitative morsels of progress: $1 million daily run rate for Sponsored Stories, with half occurring on mobile, where Facebook only recently began selling ads separately from  desktop and fully integrating them into newsfeeds.

So, basic numbers and corporate boilerplate aside, what did we learn about the company’s progress, or lack thereof?

First, it’s beginning to materially monetize mobile, something it couldn’t say in its S-1 or even on IPO day. Granted, for a network of nearly 550 million mobile MAUs, $500K per day does not a robust advertising business make, but it’s progress nonetheless. Moreover, various studies from independent ad agencies anecdotally suggest that mobile Sponsored Stories drive engagement at a multiple of desktop. Then again, they have to because of the inescapable real estate and inventory constraints of the form factor.

Now, the inevitable mobile dilemma: if Sponsored Stories in the newsfeed show early signs of working, yet space is limited, will Facebook ramp up the number of ads it presents? This is the catch-22 tension that exists across the network, but it’s more pronounced on mobile because of the size, and the fact that all ads are “native” newsfeed units that propose to act like organic content.

Sandberg suggested that it will soon throttle up the numbers of Sponsored Stories appearing in the desktop newsfeed. Will mobile follow suit? Will it have to? This is the fundamentally risky yet financially promising pretzel that Facebook must wrestle with. If it opts to push the envelope, it may need to unlock new forms of targeting to optimize relevance, such as its recent experiment that leverages Facebook Connect to target mobile users with ads based on their prior app usage.

Sequentially, the payments revenue stream was almost flat, growing 3 percent from Q1. This isn’t surprising considering that social gaming usage is swiftly shifting to mobile, where Facebook is yet to unveil payments. Meanwhile, only in recent months did the company introduce its app store for desktop and mobile and open up its payments platform beyond Credits to support other developers’ currencies.

Finally, Sandberg opined on the local opportunity: “It’s the holy grail of the Internet,” asserting that Facebook is uniquely positioned to capitalize because of the 7 million businesses that market from their Pages each month. We’ll see what shape their local strategy takes, as Facebook has had some false starts with SMBs (its short-lived deals platform) and hasn’t shown much propensity to ramp up a field sales force to control small merchant relationships directly.

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