The popular and fast-growing blog service is mulling a $1.1 billion acquisition offer from Yahoo. But while the massive blogging powerhouse only pulled in $13 million in revenue in 2012, and raised $125 million at a lower $800 million valuation, Tumblr CEO David Karp feels $1.1 billion is too little.

I guess it depends what yardstick you use.

If you look at an Instagram-style deal, which was originally around a billion dollars but eventually, due to Facebook’s stock market woes, came in a little lower, he might be right. But that deal had one thing going for it that Tumblr does not.

Instagram chief executive and co-founder Kevin Systrom had multiple suitors, while Tumblr only has one.

That’s because, as Forbes reveals, Yahoo is currently negotiating under a lockup. So even though Facebook, Microsoft, and potentially other acquirers are interested, Yahoo has at least a period of time in which it is the only one on the dance card.

In addition Tumblr, which famously hates advertising and only started trying to make money after five years in existence, is in a bit of a pickle, as its $125 million in funding is running out, giving the service only a few-month window in which to raise a new round or find a sugar daddy.

That’s likely a strategic error on Karp’s part, who has said that advertising “really turns our stomachs.”

Tumblr only started to get serious about ad revenue in mid-2012, and is only planning to roll out its third major ad product — pay per view, in which you pay to get others to view — sometime later this year. Being more aggressive on monetization would have given Tumblr more runway to make a leisurely decision about an acquisition, or made the company more attractive to investors if it tried to raise another funding round.

There’s no question, however, that Tumblr is a traffic powerhouse. It ranks ninth on the list of most-popular U.S sites, and with 217 million global monthly unique visitors and 74 million million posts each and every day, the site is both huge and fast-growing. Few companies could monetize its 108 million blogs, 51 billion posts, and 16 billion monthly pageviews as well as Yahoo.

So while Yahoo is likely to come up a little, Karp could pick worse partners. And he might do well to finalize a deal sooner rather than later.

Today, not that much has changed.

After debuting close to $40 and cratering to just under $18 in August, the stock has somewhat stabilized in the $25 region, down 30 percent from its opening-day high. And along the way, the story emerged of how Facebook tried to hide some of the mobile risk inherent in its business and how the company panicked and botched its IPO by using vague positive language in its public prospectus and, apparently, specific negative information about slowing revenue growth to institutional investors privately.

Not to mention the $100 million paid to banks to stabilize the stock — on top of $176 million in IPO fees — for efforts that ultimately failed. And technical glitches that cost the NASDAQ $62 million in compensatory fees.

All of which negatively affected the overall IPO market.

That all said, however, Facebook has seemingly nicely recovered from the disaster — at least from a business fundamentals perspective. Revenue growth was strong in its latest quarterly earnings release, with the company booking $1.46 billion in revenue for Q1 2013, compared to about $1 billion a year ago. More importantly, mobile was significantly up, accounting for 30 percent of ad revenues, and Facebook singlehandedly accounted for 6.5 percent of all online ad dollars spent in the U.S.

Not exactly Google numbers, but pretty good nevertheless.

And the company has massively beefed up its advertising options. It’s now posting retargeted ads right in the news feed, once sacrosanct territory. And in a move aimed directly at advertising giant Google, Facebook has launched a self-serve tool that allows advertisers to target its users based on what they actually buy and want to buy offline … which is a significant move to targeting the intent graph that Google hits so well by virtue of being a search engine, but Facebook has often missed since its visitors are on the site to meet and greet people. In addition, as soon as July, Facebook will be rolling out 15-second video ads in the news feed, a product that it will be charging major brands millions of dollars for.

All of which is having an effect.

The consensus recommendation for Facebook is currently a buy, with a price target of $34. Most analysts are in the Strong Buy category, with few or none in the dreaded Underperform or Sell slots. And in the past four weeks, analysts have revised their earnings estimates upward by a factor of 6 to 1.

So there’s a lot of positive in Facebook’s future, and there’s a ton of potential. But it’s still challenging when analysts compare Facebook stock with other internet high-fliers like LinkedIn or Yelp, which rose 148 percent and 48 percent in their first years, respectively.

But at least it’s better than Groupon and Zynga, both down around 75-80 percent.

And, I would argue, while there are a ton of challenges and many very significant competitors — primarily Google — the future for Facebook is bright.

Even if the public start was a stubbed toe.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple has built a massive and fast-growing $16 billion annual revenue stream in digital content alone, Apple analyst Horace Dediu says.

The company announced that quarterly iTunes revenues topped $4 billion — including $2.4 billion in content alone — in its latest earnings report. Based on historical numbers alone, that’s a $16 billion annual run rate, thanks to Apple’s 500 million iTunes users. But since it also has grown at a fairly steady 29 percent per quarter for the past six years, it’s also an underestimate of the annual value of the iTunes ecosystem.

And it gets better as users have more Apple devices.

“Apple users spend about $1/day for each Apple device in use,” Dediu says.

Source: Horace Dediu

iTunes digital media revenue by product segment.

All of which means that Apple is still king of the mobile ecosystem, at least as far as monetization is concerned. Users have currently downloaded 49.9 billion apps, and Apple is currently running a contest which will see the downloader of the 50th billion app win $10,000 in iTunes cash. While Google Play is growing faster than Apple’s app store, Apple still leads in downloads, and it holds a 2.6-times revenue advantage.

It’s also an interesting metric for Amazon to evaluate itself by.

Amazon sells Kindle devices at or near cost in part because it hopes to make extra revenue on digital content — perhaps $3 per user per month – via its own app store and its digital media offerings, such as TV shows and movies. Its newly launched virtual currency Amazon Coins should help with that mission, and with 11 million to 12.5 million Kindles sold through Christmas 2012, and perhaps 15 million sold to date, that would translate into just over half a billion dollars in revenue.

And at Apple-like numbers of $40/user/year, it would be $600 million dollars.

All of which could help explain why Amazon is hitting digital media hard and buying technology to make all of its Kindles full-color, with responsive screens.

And why Apple, Amazon, and Google are increasingly hard-core competitors in their three-way battle to own your devices … and your wallet.

Image credit: 401(K) 2013/Flickr

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple’s iTunes store hit an all-time revenue high this quarter, bringing in $2.4 billion. People are supporting this by downloading hundreds of apps per second.

Apple chief financial officer Peter Oppenheimer announced the figure during today’s quarterly earnings call. He claimed that iOS App Store purchases counted for  74 percent of app store sales across all platforms. We’ve heard many times that developers can make more money building for iOS customers, and it seems customers are opening their wallets.

Indeed, Oppenheimer claims that customers download over 800 apps every second (though this doesn’t mean that all of them are necessarily paid apps). That means iOS folk download over 69 million apps every single day. While many of these apps are likely free apps, in-app purchases count toward Apple revenue as well, given that Apple takes a 30 percent cut of basically anything you sell through the App Store.

Currently, the App Store has 850,000 apps, 350,000 of which are specifically made for iPads. Apple sold 19.5 million iPads this quarter.

Of course, apps aren’t the be-all, end-all for Apple iTunes purchases. Movies, TV shows, and music all continue to sell as the traditional content pipelines change (especially for music). Business teams are also becoming more interested in building company-specific apps, according to Oppenheimer, who said Apple has seen an increase in iPhone usage among those companies.

Businesses currently involved in these programs include Cisco and Nordstrom.

iTunes gift card via 401(K) 2013/Flickr

Revenue will definitely be down from the company’s traditionally big holiday quarter, but the big question will be how Apple’s Q2 2013 will compare to Q2 2012.

With two product lines — iPhone and iPad — making up 72 percent of Apple sales, Apple’s quarter — and its sagging stock price — will hang on those two products.

But the limited amount of data we’ve seen lately on iPhone and iPad sales has not been great. Apple lost some U.S. smartphone market share this past quarter, and with some analysts saying that iPad shipments collapsed in the first month of this year, it’s likely we’ll see minimal growth at best. To make matters worse, it looks like Apple’s best-selling iPad model is the cheaper, lower-margin iPad Mini, meaning that even with good unit sales, revenue and margin could be problems.

Investors at Estimize are projecting revenues of $43.5 billion, up slightly from the year-ago quarter of $39.2 billion, but the Wall Street consensus is only $42.5 billion. In early 2012, when Apple stock was in the middle of its incredible growth phase, its Q2 numbers were down 15 percent from the holiday Q1. This year, if Apple hits the Street consensus, it will be down 22 percent from first-quarter numbers.

Either direction, this quarter will be one that confirms the nay-sayers’ opinion that Apple is slumping, or if the company can pull some magic with a spectacular quarter, one that reaffirms the believers.

Apple stock is down almost $14 dollars today to $428.91. At its height in October 2012, Apple stock hit $702.

Image credit: waferbaby/Flickr

Yahoo might see significant growth for the first time in years, with analysts predicting net ad revenues rising by 3.2 percent to a total of $3.28 billion for 2013.

Ad and marketing research firm eMarketer is also forecasting growth in Yahoo’s search marketing revenues: up by 7 percent to $1.23 billion for 2013.

When it comes to display ads, Yahoo has actually been posting negative numbers in years past. eMarketer expects that to turn around for the first time in 2013, with Yahoo posting one percent display revenue growth this year and increasing that growth to four percent by 2015.

Granted, the online and search ad market is growing at a greater rate than Yahoo’s gains, and companies like Google and Facebook are posting truly killer year-over-year numbers. All this means that while Yahoo’s bottom-line numbers will grow, its share of the domestic online ad market will decrease, shrinking to just 6.2 percent. For contrast, Google claims more than 72 percent of the total online ad spend in the United States.

But as eMarketer points out, 2012 was the first time in several years that Yahoo posted such revenue gains at all, and that trend continuing through 2013 is a very good sign.

“eMarketer … remains bullish about Yahoo!’s display business and expects growth in 2013 and 2014 as the company removes clutter and increases prices with higher-quality inventory,” a rep stated via email.

In terms of display ad revenue, eMarketer expects newcomers like Twitter to post dwindling returns while Yahoo makes a slow but steady comeback and Google continues to hold steady at around 35 percent growth year-over-year for the foreseeable future.

Other signs Yahoo is staging a comeback: a string of splashy acquisitions (the Dailymotion buyout, the Jybe acquihire, and then Summly) , a new data center and added jobs, and CEO Marissa Mayer’s zero-tolerance policy on WFH slackers, underperforming mobile apps, and cluttered homepages.

Overall, Yahoo’s stock price has gone up around 48 percent since Mayer took the CEO’s seat and is currently trading at $23.54:

Image credit: Jolie O’Dell/VentureBeat

Robin Thurston is CEO of MapMyFitness

You’ve already beaten the odds — your app is successfully gaining adoption. But now a more difficult challenge looms: You need to parlay that app success into a viable business.

A successful apps-based business will demand many of the easy-to-overlook (but crucial) conventional business functions that go beyond pure app development and software maintenance such as customer service, PR and marketing, finance, operations, etc.

But let’s put those things aside for a moment and focus in on the biggest single challenge facing the developer of a successful app: Generating a sustainable revenue base from which to grow a business.

Here are three ways to do that:

#1 – Paid apps

Paid apps are an indispensable component to any revenue-generating efforts in the current app store environments.  Any developer offering a free app should strongly consider offering a paid version as well (and vice versa), even if alternate revenue generation strategies are in play.

There are a few reasons for this:

• There is a large class of consumers who simply prefer paid apps. They directly seek paid apps via the app store categories and will download a paid app over an identical free one.
• Paid apps can easily and effectively be directly promoted by the developer.  E-mail blasts to the free app user base, and interstitial notices within free apps can be a highly effective way to boost revenues and better, boost paid apps high in the rankings of the app stores. By utilizing these tools in bursts. developers can maximize organic revenue lift from the rankings jump as well.
• App stores treat paid apps differently.  There are times when the app store editorial teams are looking for a paid app to promote (over a free one).
• Temporary price drop promotions are easy to execute, and very effective.

Important points to consider with paid apps:

• Consumer expectation of lifetime support: Even at a $.99 price point, consumers have come to expect a lifetime of value and support from an app developer.  Carefully consider what upgrades you are offering and how these are messaged to the consumer.  Paid apps are a one-time charge only, and consumers rarely expect to have to pay more to unlock additional value from a paid app or have a feature set change down the road.
• App store dynamics favor lower price points.  If you have high-cost content or expensive features, figure out how to break them up into bite-sized chunks to keep prices low and revenues aligned with costs.
• Free app downloads tend to be the best source of leads for paid app upgrades.  Make sure you can reach your free app users effectively and convert them to the paid app.  Do so in strategic bursts with other marketing initiatives for maximum efficacy.

#2 – In-App purchase

In-app purchases can be a great way to generate revenues from both free and paid apps.  Moreover, they can be used to effectively gather information on price and feature combinations that will sell most effectively, since product pricing and descriptive information can be modified on the fly if implemented properly.

Both one-time and subscription models can be realized via in-app purchase — although on certain platforms, auto-renewing subscriptions are only approved for use by certain types of applications.

For one-time in-app purchases, many of the same guidelines apply as with paid apps, although typically the promotional tactics that are used for paid apps are less effective when applied to in-app purchase (due to the limited number of ways to drive users to in-app purchase checkout flows).

Subscription models via In-App purchase represent a sustainable, renewable revenue stream for developers.  By building in time or usage-based product expiration, developers can build repeat business from customers over a longer time period.

This model requires intensive focus on repeat usage and conversion — without auto-renewal, the customer has to re-purchase the service at regular intervals, and achieving solid renewal rates can be difficult for even the most popular apps.

#3 – Advertising and sponsorships

Much has been written about the challenging state of mobile advertising. Inventory is outpacing demand, ad units are highly commoditized, and the upside for developers via indirect ad sales (ad networks) remains bleak as mobile eCPMs (effective cost per thousand impressions) have remained flat.

There are, however, some developers experiencing great success with mobile advertising, who tend to employ a combination of three key ingredients:

• A unique and desirable audience
  If your app users are distinctive in some way versus typical smartphone users, they become more desirable for direct advertising or sponsorships.
• Differentiated and targeted native ad “experiences”
  Due to the proliferation of banner advertising, distinctive ad experiences offer unique opportunities for brands and agencies, coupled with much higher response rates from consumers.  These can include rich media ads (i.e. audio/video), however, targeted “experiential” customized ad units that are unique to your app’s user experience offer a high value engagement vehicle not available elsewhere.  One great example is audio ads for apps with a strong audio oriented experience.  Additionally, full app takeover sponsorships provide brands a high degree of exposure and offer a more memorable experience than traditional banner campaigns.
• Direct sales
  A high performance direct ad sales team that knows how to demonstrate the unique value of mobile advertising can be a major benefit. This is difficult to build, however, and requires a certain scale before it’s even feasible.

Generating a sustainable revenue stream is by far the biggest challenge when trying to make the leap from building apps to building a business based on them. Through a savvy and thorough consideration of all the options and app store dynamics, developers can maximize their chances for success.

photo credit: brandon shigeta via photopin cc

The Apple CEO has a lot to say to investors. His company’s stock has been ravaged by Wall Street in the past year, causing the company’s valuation to drop over $200 billion in the last half-year. Revenue in a record first quarter of almost $55 billion and profit of $13.1 billion didn’t make Wall Street happy, and Apple stock has continued to sag in 2013.

Source: Google Finance

Apple stock in the last six months

Cook started out with a bang, responding to questions about Apple’s cash stash and suggestions that Apple has a “depression-era” mentality, hoarding cash under its mattress.

Also see Tim Cook: “Apple is the center of innovation”

“Apple makes bold and ambitious bets on products, and we’re conservative financially,” Cook disagreed. “And last year, we invested 10B in CapEx, we think we’ll do similar this year … I don’t think those are the actions of a depression-era mentality.”

He did admit: ”We do have some cash.”

Apple has about $137 billion in cash on hand, and has committed to returning $45 billion of that to shareholders over the next few years.

On the topic of investor David Einhorn’s hedge fund Green Light Capital’s lawsuit, which aims to prevent Apple from removing preferred shares, Cook was straightforward, calling the lawsuit a “silly sideshow,” adding that Apple would go to shareholders before making any changes.

See also: No cheap iPhone: Apple’s religion is ‘we must do something great’

“Frankly, I find it bizarre that we would be sued for doing something that’s good for shareholders,” he said, adding that the lawsuit itself was a waste of shareholder money.

On acquisitions?

In what might be a surprising answer even for long-term Apple followers, Cook said that over the last three years, Apple has averaged an acquisition about every other month. And, also surprisingly, Apple has looked at large acquisitions.

“In the case of large acquisitions, we have looked at large companies,” Cook said. “In each case we’ve done that thus far, it didn’t pass our test. We’re disciplined and thoughtful … and we don’t feel a pressure to go out and just acquire revenue.”

After speaking about Apple’s retail stores adding 30 new locations in 2013 and commenting on cheap iPhone rumors, Cook ended his time by gently but firmly responding to Apple critics, many of whom wear ties, use cufflinks, and trade stocks daily.

“We don’t care if people are lobbing grenades from the sidelines,” Cook said.

Rather, Cook plans to stay the course and continue what Apple is doing best, which Cook feels is “pretty incredible.”

Image credit: Dean Takahashi

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Fab released a number of updates to its iOS and Android applications today, saying that it wants to focus not on sales but on making the Fab app a place where people want to browse and stay awhile.

“We want people to want to take their mobile [devices] out of their pocket hourly just to see what’s hot on Fab right now,” said chief executive Jason Goldberg in a blog post. “We believe that if people enjoy browsing and discovering on Fab, plenty of sales will happen over time.”

And sales have certainly happened. The company says that 30 percent of its sales comes from mobile and even saw a spike up to 50 percent on mobile for two days in the last month. Fab predicts that that in the next two years, the iPad will overtake the iPhone (probably because of the larger screen size for product browsing). For now, however, mobile is even convincing customers to buy more — 20 percent more — than web customers.

Because of this, Goldberg says the company is issuing updates to its mobile apps ever few weeks. You can use today’s new features to search for a product by type, color, and to sort by what’s available, “favorited” by Fab users, best-selling, and price. In order to make Fab more “browsing-friendly,” it also hides the navigation bar once you’ve started scrolling.

“For nearly a year now, we’ve been designing and building new Features for Fab’s mobile users first, and then taking those features to the web,” Goldberg says. “Building mobile-first forces us to think about how Fab will be used by people on the go first, and people at their desks second.”

Jason Goldberg photo via Fab

Essentially, the pitch is this: Mixpanel’s new Revenue Analytics product helps you determine the lifetime value of a customer. That’s a great metric on its own; and when it’s paired with the ability to track precisely how specific items in your strategy and tactics are impacting revenue, it grows wings. And helping product managers see, without having to run a report, that 35-50 year old female clients are twice as valuable as 18-25 year old males, or that customers acquired via Google AdWords spend three times as much as those who enter via Twitter, is magic.

That’s especially important right now, says Mixpanel CEO Suhail Doshi, because startups are having a hard time raising money — especially for consumer plays. But if they can show exactly how their product converts and funnels and ultimately produces cold hard green cash, the VC conversation is an awful lot easier to ace.

The new product is free to Mixpanel’s existing customers and installs, Doshi told me, with one line of code in your web or mobile app.

“The broader part of the industry doesn’t use this [lifetime value of a customer] metric,” Doshi told me yesterday. “But it’s an important number to know. Companies like Zynga and Netflix grew very fast because they could spend millions and millions of dollars and know they’re going to get a return on their investment.”

But in isolation, any metric is limited. The true magic comes when you know what factors drive your key metrics.

Source: Mixpanel

Mixpanel retention analysis

That’s the target Mixpanel’s new product is squarely aimed at. Mixpanel already knows an awful lot about your users; now, the plan is to tell you exactly which factors lead to maximum revenue. That’s how, Doshi told me, social dating site Grouper found out that Chicagoans were their most valuable users (who would have known?). And how project management company Sprint.ly discovered that customers who integrated their product with Github were 1,400 percent more valuable.

“This is actually very, very hard, and most companies don’t do this because the data is hard to access, it’s a manual process,” Doshi said. “But when you have it integrated, you can ask questions like, ‘Is Facebook Connect actually getting our customers to stay?’ and ‘What’s the actual value of that?’”

The six new categories are iPhone, iPad, Mac, iPod, iTunes (with software and services), and Accessories. All of them are billion-dollar businesses in their own right, but of course they’re not all the same size. iPhone revenues were $30 billion, 15 times the accessories business and dwarfing every other business category.

The new iTunes category, which came in at $3.687 billion for the first quarter of 2013, includes all the revenue from music sales, app sales, software sales via the Mac app store, and any other media sales (such as books and movies. Apple has also stuffed a few random items into iTunes that might otherwise fit in a “miscellaneous” category: AppleCare extended warranty revenue, licensing revenue, and services revenue.

But essentially, if Apple has a good iPhone and iPad quarter, Apple has a good quarter. Seventy-six percent of Apple’s revenue, which totals $41.42 billion, comes from those two segments alone.

Two numbers are particularly interesting.

One is digital media in the iTunes segment. Revenue from digital media is now almost worth more to Apple — top-line revenue — than all its iMac, MacBook and other Mac hardware sales. This will likely only grow. The second is Accessories, which also is almost worth more to Apple than iPod sales. Both are signs of the future.

Here’s the raw data:

• iPhone: $30.6 billion
• iPad: $10.7 billion
• Mac: $5.5 billion
• iTunes: $3.7 billion
• iPod: $2.1 billion
• Accessories: $1.8 billion

photo credit: Hans and Carolyn via photopin cc

Even though Apple and Google’s app stores offer more than 1.4 million apps combined, just 25 U.S. developers generate half of the revenue from app sales, according to a new study by research firm Canalys.

The study looked at sales in the first 20 days of November 2012. It found $120 million was generated by app downlaods and in-app purchases, but $60 million of that total went to 25 companies, and mostly gaming ones at that. Companies in the top 25 included Electronic Arts, Disney, Kabam, Rovio, Glu, Gameloft, and Zynga. The only non-gaming app in the top 25 was Pandora, the Internet radio service.

Canalys VP and principal analyst Chris Jones said one reason wealth consolidates with the top 25 is because these game developers have multiple games and they can cross-promote between titles. He writes:

Part of the story here is that successful game developers almost invariably have multiple titles generating revenue. Zynga, for example, had 15 titles in the list of top 300 grossing iPhone apps on average in Apple’s App Store every day, and nine titles in the equivalent list in the Google Play store. Even with its singular focus on its Angry Birds franchise, Rovio has multiple game variants in the list. With the holiday season now underway, we expect to see many of these top game developers employing discounts and special offers, taking advantage of their ability to cross-promote within their app portfolios. This is expected to ensure that over the Christmas period in the US, the dominance of key game developers will only increase.

When you start analyzing the list of apps themselves, games don’t appear to have as strong of a hold. Games accounted for 145 of the top 300 paid apps in the Apple App Store and 116 of the top 300 paid apps in Google Play. That means there is room for non-game developers to make meaningful cash from their titles, but they need multiple apps in the top 300 to make an appearance in the top 25.

If non-game developers want to start getting more notice for their titles, they need to employ different promotional strategies. They also need Apple and Google to improve discoverability in their respective app stores. Apple claims it took a step in the right direction by making apps easier to browse through in iOS 6, but many of the design changes benefited incumbents rather than challengers.

“Discoverability is a particular issue in the Apple App Store and in Google Play given the huge inventories they boast,” Canalys senior analyst Tim Shepherd said in the report. “With top game developers’ content so prevalent in the stores, it can be hard for other good-quality apps to get the attention they deserve. Developers of other kinds of apps need to consider how to promote them. Depending on the type of app, they should consider how best they can exploit social media and social recommendations, tactical sales promotions and discounts, branding tie-ups, and targeted in-app advertising.”

Cake cut in half via withGod/Shutterstock

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Colin Day is CEO of iCIMS, Inc. a provider of SaaS talent acquisition solutions. iCIMS has been profitable for the last ten years, achieving a CAGR of 24% from 2007-2011.

Apple contacted me this afternoon to challenge those numbers.

UPDATE: App Annie clarifies its numbers

The reminder an Apple rep gave me is that, in its Q1 results early this year, Apple announced that it has paid out $4 billion to app store developers since the app store launched in mid 2008, and that at its October 23 iPad-mini-and-everything-else unveiling, Apple reported $6.5 billion paid to developers.

Source: App Annie

Part of App Annie’s report

Which means that from mid 2008 through the end of 2011, Apple sold at least $5.7 billion worth of apps. And that from January 24 to October 24 of this year, Apple sold $3.6 billion worth of apps.

I don’t know about you, but that doesn’t sounds like 12.9 percent growth to me. Or .7 percent contraction in the last month. In fact, $3.6 billion in sales one year compared to $5.7 billion over three-and-a-half years seems like 63 percent growth.

Getting to year-over-year growth rather than cumulative growth requires some math … and assumptions.

Since in October 2010 Apple had announced $3 billion in payouts, it must at that point have sold $4.3 billion in apps. And since the company ended 2011 with $5.7 billion in sales, 2011 must have seen at about $1.4 billion in sales, but likely a little less (November and December 2010 are also in that figure, but so is January 2011).

In any case, contrast that $1.4 billion in 2011 with the $3.6 billion in just eight months of 2012 in which Apple sold $3.6 billion of apps, and you’ve easily got doubling — probably well over 200% growth.

My math may be off, and I don’t have perfect numbers for exact years, so take all of those numbers with a big fat grain of salt. But a couple of things are clear: Apple’s app store revenue growth in 2012 is most definitely not 12.9 percent.

The worst part of this story?

I personally reported on those App Annie numbers this morning – uncritically — and I should have known better. The clues are in the data that Apple has already provided. It doesn’t make me feel any better, but The Next Web did the same thing, as did Mashable, and PCWorld, among others.

I’ve asked App Annie for an explanation and have not received one yet, despite some back-and-forthing with PR reps. App Annie’s CEO, Bertrand Schmitt, is in Beijing, which isn’t helping. What I’ve gotten so far is that there may be a difference in how the two companies are defining revenue.

That, I would suggest, is an understatement.

I will update this post as more details become available.

Image credit: John Koetsier

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

The little-known company that provides high-end revenue lifecycle management software for Twitter and Facebook is now offering the same technology for the little guy.

Today Revstream, which already processes over $25 billion in annual revenues for Twitter, Facebook, Activision, and VMware, among other companies, announced that it is releasing a version of its software on Force.com. The new cloud-based app will allow startups and growing businesses to manage their revenue, stay standards-compliant, and forecast future earnings.

In case you’re wondering, revenue management is not exactly page-turning stuff — perhaps unless you’re an accountant — but it is a potential life-saver.

Why?

Revenue management and recognition is increasingly difficult, with simple sales being replaced by subscriptions, upgrades, downgrades, bundles, and delayed revenue recognition deals. At the same time, regulatory requirements from the SEC, GAAP rules, and Sarbanes Oxley have greatly increased the complexity around revenue recognition issues.

“We were formed to help solve the problem of revenue management and revenue recognition,” Revstream CEO Rajiv Chopra told me last week. “It’s a problem because the way companies are built and the way revenue is recorded are not in sync.

A decade ago the problem only affected a portion of your business, he said.  But now, with the explosion of cloud services and the incredible profusion of ad-supported businesses … 100 percent of many companies’ revenue is under scrutiny.

Revstream, which integrates into a company’s billing systems with a very high degree of automation, essentially guarantees that your revenue recognition, income forecasts, and lifetime value of customer projections are standards and regulations-compliant. That’s important for companies who are planning to IPO, startups that might eventually be acquired, or even startups that are planning a follow-on round of financing.

“We decided that small companies and pre-IPO companies needed this,” Chopra said. “So we packaged it into a software-as-a-service solution on Force.com so we can deliver it in the cloud. In a nutshell, it brings the same compliance at a much lower price point.”

That high degree of automation which is important for enterprise customers is even more important for small customers, Chopra told me. The same is true for ease of integration, which can hinder acceptance or use of a new software capability. That’s why the company built the cloud version on Force.com … which bakes in both automation and integration right from the start.

“Most customers we talk to already have a billing system … it’s called a website,” said Chopra with tongue somewhere in the vicinity of his cheek. “They don’t need an ERP system, they just need a revenue management system.”

Early customer My Life, which helps 60 million users manage their social networks, is a believer:

“Revstream Cloud provides the key capabilities and scale that subscription businesses need to efficiently automate and manage recurring revenues,” CFO Peter Oey said in a statement.

photo credit: peasap via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Google’s mobile operating system Android may be winning the smartphone wars, with over 75 percent market share. But Apple and Microsoft could be making more from Android than Google — up to 600 percent more next year.

This past weekend, Apple and HTC signed a patent cross-licensing deal that, according to one analyst, could see Apple collect between $6 and $8 for each and every Android smartphone HTC sells. And Microsoft, which has been working on licensing its patents to Android manufacturers for a number of years and has licensing deals with LG, Acer, Samsung, and many other companies, collects as much as $5 per device.

Google, on the other hand, though it has not broken out Android revenue, makes as little as $1.70 per Android device, per year, Asymco calculates, based on data Google was forced to reveal in court filings. Even at $2 a device, that’s only a sixth as much as the combined $12 that Microsoft and Apple could make for each Android smartphone.

This assumes, of course, that Microsoft collects royalties from all Android manufacturers … and that Apple will duplicate its HTC licensing deal with Samsung and all the other smartphone companies. And those are big assumptions.

But Microsoft has already been shown to make more from Android than from its own Windows phones. And some kind of licensing deals will have to be done, surely, unless Apple and Samsung plan to dual-handedly ensure the future financial viability of the legal profession. Which, arguably, they’ve taken a good crack at already.

Three good things from Google’s perspective: Up to April of this year it’s made perhaps three times as much on iOS phones and tablets as it has on its own Android devices (perhaps less now with iOS 6 and no Google Maps), mobile ad revenues are rising across the board, and the amount it makes on each Android device recurs every single year.

All of which means the trends are good for Google, although there may be pressure to increase revenues in ways that could harm the Android user experience. But things are also good for Apple and Microsoft, which stand to make money on their own mobile ecosystems as well as Google’s.

Which is kind of like having your cake and eating it too.

photo credit: JD Hancock via photopin cc

One of the big stories in Apple’s results is slowing growth in international sales.

Forty percent of Apple sales are consummated in the United States. That may sound bad, but it’s actually good, and it’s up from the second quarter of this year, in which 36 percent of sales were home on the range, and the just-previous third quarter, in which 38 percent of Apple sales were consummated locally.

International sales strength has been a big part of Apple’s success story. Key products such as the iPad have even at times enjoyed higher market share in some Asian markets than in the U.S., and slowing sales abroad is not good news. China is definitely not the problem — Apple chief Tim Cook said in the earnings conference call that China revenue is up 26 percent year over year — but other markets are not picking up the slack.

And by other markets, I mean Europe and countries in Asia that are not China or Japan.

While Apple’s revenue in the Americas grew 43 percent, and Japan jumped 113 percent, Europe grew a relatively anemic 8 percent, to just over $8 billion. Asia Pacific — which includes China — must have had some very poor performers, since even with China’s 26 percent jump the region grew only 15 percent.

Bond author Ian Fleming’s antihero Goldfinger once said “Once is happenstance. Twice is coincidence. Three times is enemy action.”

This is the third quarter in a row of slowly growing international shifting. Sales are still up, of course, and this quarter’s $8 billion increase in revenue from the previous year’s equivalent quarter means that international sales are up as well.

But not, critically, at the same pace as domestic sales.

There is something happening in the international market that is slowing Apple sales. And it may very well be all those sub-$100 Android phones. Which means that Apple must beware of distancing itself too far, price-wise, from the competition.

That’s part of what the iPad mini can help fix, but questions abound there, too.

photo credit: Marxchivist via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple released its fourth quarter earnings today, just meeting market expectations. Wall Street said Apple would be around $35 billion in revenue, while the company reported $36 billion, or $8.67 per diluted share.

Apple didn’t release specifics about its iPhone 5, though it did increase its overall iPhone units sold by 900,000. In terms of iPads, Apple said that it saw iPad sales growth in all of the countries it’s available.

It also announced that it’ll start paying out dividends of $2.65 per common stock to its customers on Nov. 15 to all who are stockholder by the close of business on Nov. 12.

Thus far Apple’s stock has remain unmoved in after hours trading. Check out the company’s earnings by the numbers:

Revenue: $36 billion compared with $28.3 billion in Apple’s fourth quarter of 2011 and $35 billion last quarter.

Net Profit: $8.2 billion compared with $6.6 billion in Apple’s fourth quarter of 2011 and $8.8 billion last quarter.

iPhones: 26.9 million units, which is 58 percent more than Q4 2011. Last quarter Apple sold 26 million units.

iPads: 14 million units, which is a 26 percent increase from this quarter last year. In the third quarter 2012, Apple sold 17 million units.

Macs: 4.9 million units sold, only a 1 percent increase over the same quarter in 2011. Last quarter Apple sold 4 million units.

iPods: 5.3 million units, which declined 19 percent from the same quarter in 2011. Last quarter Apple sold 6.8 million units.

Apple money image via Shutterstock

An angel may not get its wings, but somewhere, a click sells a product, downloads a white paper, or takes some personal information. In short, some exchange of value takes place — at huge, mind-boggling scale.

Larry Kim of the web marketing firm WordStream analyzed a huge divot of Google data — which I published in infographic form earlier today. WordStream offers a free Adwords Performance Grader, which gave it access, Kim told me, to about 1 percent of Google’s revenue over the past quarter.

And the data that comes out is fascinating.

Source: WordStream

The shopping industry does a lot of ad shopping

For instance, the finance industry places 617 million ads on Google.com and 5.32 billion ads on Google’s ad network each and every day, generating 28 million clicks at the highest average cost per click of any industry: over $3 on google.com, and over $1 for ads in the network. Top five advertisers in finance include names like State Farm, Geico, and Quicken Loans.

The second most prolific industry buying Google ads is travel, where brands like Expedia, Hotels.com, and Kayak place 2.5 billion ads a day to generate over 20 million clicks at an average price of just under $0.30, and complete 360,000 sales a day.

“Different advertisers define conversions differently,” Kim told me today, so those sales include not just actual flight, rental car, and hotel bookings but also any leads generated via an ad.

But the highest conversion rates belong to the education industry, which enjoys almost three times the conversion rate of travel companies. Education advertisers such as the University of Phoenix, DeVry, and Kaplan University convert at a red-hot 6.27 percent.

30 billion ads served … a day

All those millions of click and hundreds of thousands of conversions come out of probably the biggest advertising engine in the history of the world. Between ads on its own site and ads on its network, Google delivers an astounding 29.8 billion ad impressions every single day. That’s mind-boggling.

The good news for advertisers is that Kim’s data shows that average cost-per-click has come down significantly, which is part of the reason why Google lost almost $20 billion in market value in a single morning last week. Advertisers are now paying between 16 percent and 18 percent less for clicks than they did just four months ago.

Source: WordStream

The finance industry spends a lot of green with Google

“I think that’s fantastic news,” Kim says.” “It’s not only cost-per-click going down, but also that the inventory of ad impressions is going up substantialy … it means you can get more customers for less money.”

That sounds bad for Google. But not really, he told me.

“It’s actually really good news for Google, too … even though Wall Street cheers when the cost-per-click goes up and Google gets more money from advertisers … that’s not sustainable. By increasing the available impressions and clicks and lowering the costs, more advertisers will see more value from online advertising and that will be beneficial for Google in the long run.”

One caveat: While Kim is pretty confident in the data, saying that by analyzing 1 percent of Google’s revenue he’s checking a far higher percentage than Gallup, for instance, would poll for an election preview, it’s not Google data.

So it’s possible that WordStream’s data is off. With such a large sample, however — over a billion dollars in annualized revenue — it’s not likely that it is very far wrong.

photo credit: captcreate via photopin cc

Now a new report from an independent source, internet marketing software company Wordstream, is giving us more information on how, exactly, that happened.

Essentially, even though total revenue rose to hit $14.1 billion, including $10.8 billion in advertising revenue, the amount advertisers pay for each click decreased significantly. Advertisers paid 16.5 percent less per click on Google search results compared to the previous quarter, and a whopping 18.2 percent less on Google’s display network (sites around the Internet that carry Google’s ads).

Looking for more data? 30 billion times a day, Google runs an ad (13 million times, it works)

In addition, click-through rates on Google search result pages dipped 12.4 percent on Google’s high-value search pages.

The upshot is that while strong growth in the number of ad impressions and clicks — 21.6 percent on Google search, and 29.1 percent on the network — drove top-line revenue, profitability as a percentage of sales was impacted. And that’s what caused such panicky GOOG stock selling that Google asked NASDAQ to halt its stock trading temporarily.

The data comes from a study that analyzed 2,600 AdWords accounts with a quarter of a billion dollars in annualized spend, including both small and large advertisers.

So how does Google make over $100 million a day?

Here’s how:

There’s good news for people who like free content and services online. And even better news for web publishers, search engines, and social sites who want to provide that content and services.

Internet ad revenues are up 14 percent in the first six months of 2012, hitting a new record $17 billion. And that 14 percent increase is dwarfed by mobile’s nearly doubling — a 95 percent increase — to hit $1.2 billion.

In addition, digital video ad revenue grew by 18 percent to just over $1 billion while search revenues for the first quarter were up 19 percent to $8.1 billion, and display ad revenue was up just four percent to $5.6 billion.

Those numbers were released today by the Interactive Advertising Bureau, an advertising industry organization which has recently come under fire for opposing “do not track” technology that allows consumers to opt out of online tracking.

The growth in mobile is particularly interesting.

While certainly increasing from a smaller base, the near-doubling shows that mobile site and app revenue models depending on advertising are just starting to hit their stride. According to IAB numbers, the first few years of digital advertising from 1996 to 2000 showed triple-digit increases ranging from 110 percent to 320 percent annually, and if the pattern continues, mobile ad revenue has a long runway for growth.

Another interesting set of numbers focus on the type of publisher revenue model. Performance-based advertising, such as pay-per-click, has grown from 64 percent of advertising revenue in 2011 to 67 percent in 2012. Impression-based advertising, such as banners ads which are paid on a per-thousand-impressions basis, remained steady at 31 percent, while hybrid models decreased to only two percent.

“Solid double-digit growth in a stagnating economy is a significant accomplishment,” Sherrill Mane, and IAB vice-president, said in a statement. “There is evidence that CPMs are maintaining, and even increasing, further substantiating the vitality of the internet ad market.”

That’s good news for internet publishers — yes, that includes VentureBeat — and it’s good news for consumers who want free content and services.

Source: IAB

Internet ad revenues by year since 1996

Image credit: Million-dollar homepage

JustFab will send you a to-die-for clutch and blouse for $40 a month, and The Fancy will Fedex just about anything that its members like for $30. And yes, men can get a “sockscription” from smart socks manufacturer BlackSocks.com, or for under $10 the Dollar Rubber Club can even deliver a monthly pack of condoms straight to your door, every 30 days.

But the recurring revenue stream has been around for long before Basecamp and online project management, the Wall Street Journal’s paywall, or even the local newspaper that your daddy paid $5/month for.

But news is where the subscription model seems to have started, with newspapers and periodicals, way back in 1440.

Aria Systems, the cloud-based subscription billing management company, compiled a short history of the recurring revenue model, from Spotify and Netflix to telephone service back in the 1800s, and all the way back to newspapers and periodicals back in the 1400s … four years after Johannes Gutenberg started working on his printing press in Mainz, Germany.

Here’s the infographic:

photo credit: Great Beyond via photopin cc

In fact, the top five companies doubled the revenue growth of the average company in the index. For the 500 companies in the index, the average revenue growth since 2010 was 20.4 percent. But the top five companies averaged a blistering 45 percent revenue growth.

And companies that increased their Echo Rank most over just the past two months saw year-over-year revenue growth of almost 30 percent.

“Our rankings show that the companies investing in social and particularly social commerce are seeing the largest gains in revenues,” says Echo System chief executive Lance Neuhauser.

According to the Echo Rank index, the top five companies turning social into sales are:

1. FansEdge (sports fan branded products)
2. Barney’s New York (designer clothing)
3. Turn5 (runs AmericanMuscle.com, a car parts site)
4. GameStop (world’s largest gamer store)
5. Fossil (watches, handbags, fashion accessories)

Echo Rank tracks 500 e-commerce companies across various social indicators such as user engagement, social integration, and site performance. Those include factors as diverse as follower/fan count, likes and retweeets, integration of social into a company’s site and services, and how effective a website is at converting shoppers into buyers.

Source: The Echo System

A sample ranking for Barney’s New York

It appears that tight social integration can even trump site conversion performance, since Turn5, coming in at number three, has a site performance score of only seven. But its social score, which is a measure of how well it engages fans online, is a perfect 100.

Bass Pro fishing and sporting good retailer, 1-800-Flowers, and lingerie legend Frederick’s of Hollywood round out the top ten.

Notable fails in the top 500 include Aeropostale at #491, NASCAR.com at 428, and Best Buy at #215.

And the full top 10:

Image credit: Allies Interactive Services Pvt. Ltd./ShutterStock

The ecosystem is still healthy, with 650,000 apps in the app store, 225,000 of which are optimized for iPad, but the $100 million decrease in revenue is somewhat astonishing.

Lower iPhone sales are understandable: Consumers are waiting for the iPhone5.

But any new iPhones and iPads — and in fact any new Mac sales — should be additive to app store sales. So, building on a base of $1.9 billion in sales from the previous quarter, 26 million more iPhones and 17 million new iPads should have increased sales of songs, apps, and in-app purchases.

Seasonality should not have impacted sales; we’re not talking about a comparison to a Christmas quarter in which consumers might be downloading more apps than usual.

Oppenheimer did say that payments to developers topped $5.5 billion and that app stores were added in several new territories, including Hong Kong and Singapore.

The 650,000 apps is up from 600,000 apps that Apple announced last quarter, and the $5.5 billion paid to developers is up from the $4 billion announced last quarter.

Image credit: John Koetsier/iTunes

eBay met high expectations for its second quarter earnings today with revenue, net income, and user growth up double digits from last year.

The company reported a revenue of $3.4 billion, up 23% compared to the same period in 2011. eBay also brought in $692 million in net income, with share prices coming in at $.53 per share, up from the $.22 per share last year.

“This was eBay’s strongest quarter of year over year organic … growth since 2006,” said eBay CEO John Donahoe on the earnings call. “eBay is revitalized.”

PayPal was a major driver of this performance, reporting that its revenue increased 26% year over year to around $1.4 billion and 113.2 million active accounts. That’s nearly 42 percent of eBay’s overall revenue. eBay attributes this to the fact that PayPal now appears in more places on the website, and that buyers are using the “Bill Me Later” function more, which is based on PayPal. PayPal also announced today that it is rolling out a point-of-sale service for retailers to use in stores. In just over four weeks, Abercrombie & Fitch beta-tested and began rolling out PayPal at more than 900 locations across the U.S.

Mobile was a major contributor to the growth with 600,000 new customers making their first purchase through eBay’s mobile apps. PayPal Here, eBay’s answer to Square’s mobile payments dongle has also been doing well. PayPal Here is officially open to all markets for anyone interested in signing up. Though it doesn’t affect the second quarter, PayPal announced yesterday that it acquired Card.io, a mobile app that reads credit card information using a smartphone’s camera.

“Mobile is impacting a significant portion of eBay’s business,” said Donahoe. “Mobile shoppers and mobile payers are three to four times more valuable than Web only.”

Another factor is the recent partnership between PayPal and major Japanese venture capital firm Softbank to create “PayPal Japan.” This new focus on Japan is intended to help the adoption of e-payments in Asia, and hopefully grow small businesses in the region.

Despite analyst expectations of low profits this quarter, due to the issues engulfing Europe and a slow downing the Asian market, the outlook for eBay was high after eBay stock hit a five-year high in April. eBay has long been the world’s largest online marketplace, with millions of buyers and sellers operating through the website. eBay products and companies include eBay Marketplace, Media Marketplace, PayPal, Half.com, MicroPlace, Shopping.com, Rent.com, Stubhub and various online classifieds.

For its third quarter, eBay expected to bring up to $3.4 billion in revenue, and a diluted share estimate of $0.42 – $0.44 a share. For 2012 overall, the company expects revenue to sit between $13.8 billion to $14.1 billion.

As a group, iOS developers scraped together a grand total of $2.5 billion between last year’s WWDC and today.

At WWDC, Apple’s annual developer conference in San Francisco, the company announced that third-party developers for its platform had earned $5 billion to date — that’s double the $2.5 billion figure touted at last year’s event.

Apple splits its revenue 70/30 with developers, so if the $2.5 billion is 70 percent of app revenue, that means the entire marketplace of iOS apps was worth $3.57 billion between May 2011 and May 2012. Apple, then, took home slightly more than $1 billion from third-party developers’ efforts in the part year.

It should be noted that, while $1 billion seems like a fortune to us mere mortals, it’s peanuts, relatively speaking, to a behemoth like Apple. The company’s revenue for the second quarter of 2012 alone was a jaw-dropping $39.2 billion, making revenue from third-party apps around half a percent of the company’s overall quarterly take.

Recently, we learned that around 46 million apps are downloaded every day from the iTunes App Store alone — a number that is spiking sharply as the months and years roll on.

Another important factor in the year-over-year doubling of app revenue is the fact that iPad use is skyrocketing and expected to double in 2012, according to stats from analysts at eMarketer. More than 16 percent of the U.S. population will use an iPad at least one time each month this year, an increase from 2011′s 8 percent figure and just 3.7 percent in 2010.

While the iPad has been a big part of Apple’s revenue success story so far, it’s also been good to app developers. More iPad sales and use means more purchases of more expensive apps — and more revenue for all parties involved.

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It seems that Twitter has done an exceptional job when it comes to monetizing its mobile audience.

Not only that, but Twitter CEO Dick Costolo said the startup often generates more revenue from mobile usage than desktop, according Reuters.

“We’re borne of mobile,”  Costolo said at an industry event hosted by The Economist Wednesday. “We have an ad platform that already is inherently suited to mobile, even though we launched our platform on the Web and only started running ads on mobile recently.”

The revelation is good news for investors, especially in light of Mary Meeker’s recent report indicating that mobile monetization is poor among web properties. It’s also good news for people who want to distinguish Twitter from newly public Facebook.

Facebook has had its fair share of criticism lately when it comes to monetizing its mobile audience. As VentureBeat’s Jennifer Van Grove previously pointed out, the average U.S. Facebook user spent 441 minutes (or just over 7 hours) accessing the social network’s mobile properties in March compared to 391 minutes on the desktop. Despite these numbers, Facebook admits its only generating a fraction of its total revenue from mobile users. (To give you some perspective, Facebook generated a total of $3.7 billion in revenue in 2011.)

While Twitter’s revenue is currently estimated to be about a fourth of Facebook’s, this distinction of properly monetizing its audience will become more important as the company inches its way toward going public.

Design is determining the winners in everything mobile. The most successful players are focusing on one thing: How to make products, services, and devices as compelling and delightful as possible – visually, and experientially. MobileBeat 2012, July 10-11 in San Francisco , is assembling the most elite minds to debate how UI/UX is transforming every aspect of the mobile economy, and where the opportunities lie. Register here.

Yahoo has lost significant market share, reduced its staff multiple times, and its market cap continues to dive. But chief executive Scott Thompson is trying to rehydrate what is currently his raisin of a company by killing off unnecessary products and restructuring the organization.

The media giant is struggling to stay relevant while other companies take facets of its business and do them better. Yahoo News? Aggregated from all the other blogs and news sites out there who know what they’re doing. Answers? Made better by Quora. Search? Dominated by Google. Mail? Made less spam-y by Google. Maps? I’ll stop there.

Since 2006, Yahoo’s market cap has taken a dive from a high of $55.60 billion to $18.8 billion today. Along with this decline, Yahoo is losing revenue while continuing to increase costs. Indeed, the company seems a little desperate, even earning its own nickname as “patent troll” after suing Facebook for infringement in March.

But the company’s trying to dig itself out. In 2008, Jerry Yang, Yahoo’s former CEO decided to cut his staff by 10 percent. In 2012, Yahoo’s current CEO Scott Thompson followed suit and cut staff by 14 percent. The hope is that this will reduce Yahoo’s costs and allow it to be nimbler and raise its stock price, which hasn’t hit above $20/share in three years.

All in all, we’ve only seen the beginning of Thompson’s reign. The CEO announced a plan to kill off or combine a number of unnecessary products and help streamline operations. These could include a few of the products mentioned above, including Maps, Messenger, and Answers.

Check out the infographic below:

Infographic via Hightable; Yahoo car image via Thomas Hawk/Flickr

Which celebrated technology company is growing revenue at a higher rate than all the rest? Hint: it’s not Apple or Facebook, as you might expect.

LinkedIn, the professional social networking company turned publicly traded powerhouse, is posting the highest year-over-year revenue growth. The newly public company is growing revenue faster than technology’s heaviest hitters — Apple, Facebook, and Google included — according to fourth quarter and fiscal year company filings.

You’ve heard these growth figures before — they’ve been reported on VentureBeat and are included in company quarterly earnings reports — but the graphic below, compiled for us by our friends at statistics portal Statista, tells a rather unexpected story of LinkedIn’s maturation into a money-making machine.

Year-over-year revenue growth is not the be-all, end-all of financial metrics, of course, and companies like Apple are already so successful that revenue growth rates are bound to plateau. It’s a lot easier to show 105 percent year-over-year growth when your quarterly revenue numbers are in the low hundreds of millions of dollars, as opposed to the billions.

Photo credit: coletivomambembe/Flickr

Zuckerberg's desk

Facebook’s newest advertising product, expected to be unveiled on Feb. 29, leaked to the web yesterday. The ads themselves would appear to be a natural evolution of the company’s primary money-making business, but perhaps there’s more to these new sponsored stories than meets the eye.

The introduction of upgraded ad formats, according to one prominent financial analyst, is a last-ditch effort on Facebook’s part to meet advertising revenue budget goals for the first quarter of the year.

“We’ve confirmed with sources close to the company that Facebook is indeed behind its projections for ad revenue for the first quarter,” financial data company PrivCo CEO Sam Hamadeh told VentureBeat. “It certainly doesn’t look good for Facebook frankly.”

VentureBeat cannot independently confirm Hamadeh’s statements on the sluggish performance of Facebook’s ad business.

Documents leaked Wednesday (included below) reveal that Facebook plans to introduce an “Upgraded Premium Ads” product that will replace its existing “Classic Premium Ads.” Facebook marketing materials suggest that the new ad formats — there are six in total — will increase an advertiser’s engagement rates by as much as 40 percent.

“These documents, coupled with other rapidly rolled out changes that boosted the pervasiveness and intrusiveness of Facebook ads…are evidence that the company is struggling to meet its financial projections as its IPO looms imminently,” a PrivCo blog post dissecting the new ad formats concluded today. “Facebook is clearly choosing to increase its ad intrusiveness and frequency to pad its numbers short-term in preparation for its IPO and first quarter results post-IPO trading, at the cost of user experience and long-term growth.”

“These are the types of actions ad-supported companies save for a Rainy Day,” Hamadeh added. “It should be a red flag for investors that Facebook apparently considers that Rainy Day to be now.”

Facebook’s advertising business is a risky one. VentureBeat previously spoke with Peter Adriaens, a professor of entrepreneurship at the University of Michigan’s Zell Lurie Institute for Entrepreneurial Studies, who argued that the social network should have identified low click-through rates on ads as a risk in its S-1 filing with the SEC.

A report published Thursday by market research firm eMarketer projected that the social network would bring in $5.06 billion in ad revenue in 2012. The figure represents a 60 percent jump from the $3.1 billion it made from ads in 2011, but, according to eMarketer, also suggests a significant drop-off in ad revenue growth rates.

Facebook did not immediately respond to a request for comment.

Photo credit: Mark Zuckerberg/Facebook