Facebook just disclosed that the number of people logging into its website on personal computers declined “modestly” in the last three months of 2012, compared to the previous quarter. That’s a huge deal because, despite Facebook’s strong efforts to focus on mobile phone usage last year, it still makes much more money from its users on PCs.
It was already known that Facebook was growing more rapidly on phones. But the new disclosure, in its lengthy annual report, is significant because it wasn’t previously clear that the company’s PC user base was shrinking. Now, it’s clear that Facebook hit “peak PC” in the third quarter of last year.
Here’s what Facebook says in its annual report: “During the fourth quarter of 2012, the number of daily active users (DAUs) using personal computers declined modestly compared to the third quarter of 2012, including declines in key markets such as the United States, while mobile DAUs continued to increase.”
The decline in PC usage among Americans is doubly significant because Facebook makes more money selling advertising targeted at that audience than any other. Last year, it made $13.58 in revenue per user in the US and Canada, compared to $5.32 per average user worldwide.
Facebook only began including advertising in its mobile products last year, and by the fourth quarter, mobile advertising had grown to 23% of the company’s advertising revenue. It also saw a large increase in the number of people accessing Facebook exclusively from mobile phones and at least once a month: 157 million people did so in the fourth quarter of 2012. Another 523 million monthly users accessed Facebook on both phones and PCs.
That leaves 376 million monthly users who only used their PCs to log onto Facebook, down 6.7% from 403 million in the previous quarter. (Facebook doesn’t make that figure explicit, but you can do the math from the data it does release. You can see my math here.) Overall, Facebook grew to 1.056 billion monthly users last quarter.
In one sense, Facebook’s ability to transition into “a mobile company,” as CEO Mark Zuckerberg said on a conference call yesterday, is encouraging news. And Facebook can’t really do anything to stop the rapid shift of internet users to their mobile phones. But if that shift happens too rapidly, and Facebook isn’t quickly able to figure out a way to make significant revenue from its mobile products, then expect to see that hit the company’s bottom line in the next few quarters.
Or as Facebook explains in the “risk factors” section of its new annual report:
While we began showing ads in users’ mobile News Feeds in early 2012, we have generated only a small portion of our revenue from the use of Facebook mobile products to date. In addition, we do not currently offer our Payments infrastructure to applications on mobile devices. If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to continue to grow mobile revenues, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected.