Even though Facebook Inc (NASDAQ:FB) shares have increased 88 percent so far this year, there’s still more room for them to grow, according to analysts at William Blair. After meeting with a number of private companies and advertisers about their views of and experiences with Facebook, analysts Ralph Schackart and Ryan Domyancic came away with several main indications that the social network may just be getting started.
Facebook still making progress in video ads, mobile and Instagram
The analysts found that advertisers have been preparing some video creatives and are planning on submitting them to Facebook Inc (NASDAQ:FB) for approval, possibly in as little as three weeks. However, they still don’t have a clear view on just when users of the social network will start seeing the video ads.
In addition, they see continued growth in mobile advertising. They’re predicting that mobile will make up about 47 to 50 percent of the social network’s third quarter advertising revenue. They said this project comes from private companies with a track record of accuracy in determining how quickly Facebook is ramping up mobile advertising. They believe this increase can be partially attributed to strong pricing growth in ads from mobile app installation. Those have increased from about $3 cost per impression during the second quarter to over $5 in the third.
The analysts also believe that Facebook Inc (NASDAQ:FB) could start monetizing Instagram as early as the fourth quarter of the year. They think this could start marginally late this year and then ramp up throughout next year.
Facebook sees growth in bigger retail advertisers and key measurements
They also believe that the bigger retailers will drive revenue growth for the social network in 2014. They note that “forward-thinking e-commerce companies” currently tend to have the largest budgets for advertising on Facebook. They believe bigger multi-channel retailers with ad budgets bigger than those of e-commerce companies may start advocating more of their dollars to the social network in 2014.
The analysts said their conversations also suggested that Facebook Inc (NASDAQ:FB) is still aiming for a TV-like audience measurement by converting its digital audience metrics to traditional television measurement metrics. Around the globe, television advertising spending is about $200 billion. Even if the social network is able to shift just 1 percent to its own platform, this would add $2 billion to its revenues.
The William Blair analysts continue to rate Facebook Inc (NASDAQ:FB) as Outperform and have a $58 per share price target on the stock.