Facebook’s User Shift To Mobile Is A Positive: Goldman Sachs

Analysts from Goldman Sachs Equity Research believed that Facebook Inc (NASDAQ:FB) users’ shift to mobile in browsing the website and apps is a positive thing for the company. Based on their estimate, the sponsored stories in the mobile news feed carry CPM’s (cost per 1000 impressions) roughly 40X the corporate average.

Facebook's User Shift To Mobile Is A Positive: Goldman Sachs

According to them, Facebook Inc (NASDAQ:FB)’s new advertising initiatives associated with significantly higher CPMs will help drive its total CPMs in the future. Analysts expect Facebook shares will remain volatile due to the upcoming expiration of the stock lockup. The research firm maintained its price target for the Facebook stock at $37 per share.

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The analysts estimate indicated that mobile provides a great opportunity for Facebook to generate advertising revenue. Facebook CEO Mark Zuckerberg said in a recent interview that mobile users generate more revenue for the company than desktop users for the same amount of time they spent visiting the website.

The latest comScore survey on mobile internet usage in the United States for the month of August revealed that Facebook’s unique visitors from both browsers and apps were 90 million, a 4 percent increase month-on-month. The company’s average daily visitors rose by 6 percent to 52 million and each visitor spent an average of 517 minutes, up by 3 percent month-on-month.

Data showed that the total minutes spent by US Facebook users decreased by 5 percent to 108 bn due to the decline of desktop minutes by 13 percent every month to 61 bn. I

Globally, desktop minutes spent by visitors increased by 9 percent year-over-year; down by 2 percent month-over-month. On the other hand, the minutes spent by every Facebook visitor year-over-year was up by 2 percent and down by 5 percent month-on-month.

In 2011, the growth of desktop minutes spent by users in the United States is flat month-on-month in July and only 1 percent increase month-on-month in August.

For the past three months, Facebook users spent more minutes on mobile internet. Data showed a 10 percent increased from 38 percent to 48 percent.

According to analysts, the results of the comScore data reflected the law of large numbers in the US user base and mobile is marginally cannibalistic to the desktop business.

The research firm identified some of the key risk affecting the company’s growth such as macro, user fatigue, privacy missteps, and user backlash from new ad formats.

A related report cited TBG Digital, an advertising agency focused on Facebook Inc (NASDAQ:FB) is optimistic on the latest ad formats of the social networking giant. The ad agency expects Facebook to report double-digit growth in client ad spending in the next quarters. According to TBG, Facebook Inc (NASDAQ:FB)’s sponsored stories provide higher ROI and the limited inventory on the company’s ad exchange could drive higher pricing.