Growth in the world of Western social media is becoming expensive. Facebook's costs, notably research and development, rose at more than twice the 39 per cent rate of revenue expansion in the second quarter from a year earlier. At least Mark Zucker-berg's $270 billion giant has the firepower to keep the top line increasing.
Investors are much more sceptical about the likes of Twitter and Yelp. Both companies' shares hit the skids this week after they delivered a similar message: that future growth isn't so easy to achieve and requires heavy investment. Facebook's quarterly report was greeted with just a two per cent decline.
Zuckerberg's creation is, of course, in a different league in terms of scale, with revenue of $4 billion in the quarter. At about $14 billion at the end of June, its cash pile has increased by $3 billion since the end of 2014. Facebook has other things going for it, too.
The company's share of worldwide advertising is increasing and is only poised to improve. The $1 billion acquisition of Instagram in 2012, for instance, which initially looked pricey, is looking increasingly savvy. According to estimates from eMarketer, Facebook accounted for eight per cent of global digital ad revenue in 2014 and is expected to reach nine per cent at the end of this year.
And digital platforms are starting to steal ad dollars from US network TV - an estimated $1 billion in the season from October 2014 through June, according to Standard Media Index. Facebook is making a huge push in video and its pitch that it is more effective for advertisers than TV may pay off handsomely.
What's more, Facebook's spending to get more users is working, at least to some extent. Daily active users rose 17 per cent to 968 million members at the end of June, while the success of Zuckerberg's mobile strategy showed with a 29 per cent increase to 844 million daily users on smartphones and tablets. Facebook's willingness and ability to invest - in contrast to weaker rivals - increase its chances of success.
Investors are much more sceptical about the likes of Twitter and Yelp. Both companies' shares hit the skids this week after they delivered a similar message: that future growth isn't so easy to achieve and requires heavy investment. Facebook's quarterly report was greeted with just a two per cent decline.
Zuckerberg's creation is, of course, in a different league in terms of scale, with revenue of $4 billion in the quarter. At about $14 billion at the end of June, its cash pile has increased by $3 billion since the end of 2014. Facebook has other things going for it, too.
The company's share of worldwide advertising is increasing and is only poised to improve. The $1 billion acquisition of Instagram in 2012, for instance, which initially looked pricey, is looking increasingly savvy. According to estimates from eMarketer, Facebook accounted for eight per cent of global digital ad revenue in 2014 and is expected to reach nine per cent at the end of this year.
And digital platforms are starting to steal ad dollars from US network TV - an estimated $1 billion in the season from October 2014 through June, according to Standard Media Index. Facebook is making a huge push in video and its pitch that it is more effective for advertisers than TV may pay off handsomely.
What's more, Facebook's spending to get more users is working, at least to some extent. Daily active users rose 17 per cent to 968 million members at the end of June, while the success of Zuckerberg's mobile strategy showed with a 29 per cent increase to 844 million daily users on smartphones and tablets. Facebook's willingness and ability to invest - in contrast to weaker rivals - increase its chances of success.