Why You Should Own Facebook Right Now
Munster noted that only 1% of total ad spend in the U.S. is on mobile advertising despite users increasingly spending more time on smartphones and tablets. Ad spend is predicted to catch up to time spent on mobile within five years, which will help average revenue per user (ARPU) for Facebook. Facebook's advertising ARPU was $3.73 in 2011, Munster said.
More than half (51%) of Facebook's users access the social network through a mobile device, and that's expected to increase over the next three years, so Facebook will have to continue to think of new ways to drive revenue from its mobile initiatives. Sponsored stories is one way Facebook is currently monetizing mobile, though it has said previously it does not generate any meaningful revenue from mobile.
Munster sees the shift from desktop usage to mobile usage as a short three-to-six month headwind for Facebook's advertising business, but sponsored stories have a click-through rate of twice that on desktop, according to data from TBG Digital.
"We believe that ultimately mobile could be a 100%+ grower for Facebook in the next 1-3 years as ad dollars spent on mobile equalizes with dollars spent," Munster wrote. Mobile could be a $10 billion opportunity in the U.S., as users continue to access Facebook's applications through mobile devices, including Apple's(AAPL) iPhone, which Munster noted "has effectively become the 'Facebook phone.'"
Apple recently announced it would integrate Facebook as part of its new mobile operating system, iOS 6.
Despite the fact that the company generates nearly 85% of its revenue from advertising, perhaps the single largest area of growth for Facebook is payments.
In 2011, payments and fee-based revenue accounted for $557 million out of $3.711 billion in total revenue. That was up from $106 million in 2010, an increase of more than 400% year-over-year. Facebook generates a significant amount of fee revenue from Zynga(ZNGA) , but the company is looking to expand beyond social gaming as a way to make money.