Facebook Ad Revs Skyrocket 43%, Mobile Grows To 30%

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Facebook is looking more than ever like the mobile company CEO Mark Zuckerberg declared it had become last year. The social network's mobile business rose to 30% of its advertising sales in the first quarter from almost nothing a year ago.

That gain helped fuel a 39% rise in Facebook’s overall revenue to $1.45 billion. The company posted adjusted net income of $312 million or 12 cents a share compared to $287 million, or 12 cents per share, a year ago.

Wall Street analysts surveyed by Thomson Reuters, on average, had expected Facebook to post earnings of 13 cents a share on revenue of $1.44 billion.

"We've made a lot of progress in the first few months of the year," said Zuckerberg, in the earnings announcement on Thursday. "We have seen strong growth and engagement across our community and launched several exciting products." 

Facebook's advertising revenue rose 43% in the quarter from the year-earlier period, and represented 85% of the company's total sales. The $375 million in mobile ad revenue was nearly a third of that total -- up from $306 million, or 23%, in the fourth quarter of 2012.

This reflects Facebook’s push since last year to ramp up mobile advertising, mainly by introducing Sponsored Stories and other ads to the news feed on devices. Its ad business has benefited from extending ads to both the desktop and mobile news feed. These units generate higher engagement and higher pricing than ads that run on the right-hand column of desktop pages.

Ads running in the news feed on the desktop carried CPMs of over $4.41 in the first quarter, for example, compared to 22 cents for those on the right side of pages, according to data released by Facebook ad partner Spruce Media this week. While CPMs dipped in the quarter, the increased frequency of volume of ads in the news feed translated into increasing ad sales overall.

Facebook CFO David Ebersman said during the earnings conference call that total impressions were up 39% in the quarter, with the average price per ad up 3%.

On the mobile side, Facebook has also rolled out other formats, including app install ads that help developers promote their wares by allowing users to download apps directly from within the ads. In the quarter, 3,800 developers used the ads to drive nearly 25 million downloads, and 40% of the 100 top-grossing iOS and Android apps were using app install ads.

eMarketer projects Facebook's share of the U.S. mobile ad revenue will rise to 13.2% this year, from 9.5% in 2012.

The company signaled its broader mobile ambitions during the quarter with its launch of Facebook Home, a launcher app for Android phones that replaces the usual home screen with a Facebook-centric interface. 

Zuckerberg said the company has not really promoted Home since its launch last month, but plans to push the product out more broadly in the next few months.

Initial reports in April indicated the app had gotten off to a slow start, drawing some 500,000 downloads via Google Play amid mixed reviews and questions about how much appeal Home has beyond the most avid Facebook users.

Why Facebook is focusing so keenly on mobile is no mystery. Facebook said its number of monthly active mobile users hit 751 million as of the end of March, up 54% from a year ago, and up 10% from 680 million in the fourth quarter. Monthly active users on Facebook overall reached 1.1 billion, up 23% from a year ago, while daily active users rose 26% to 665 million in the quarter.

Among other initiatives, Facebook in the quarter launched Graph Search and new ad-targeting services including Partner Categories, which allow marketers to reach specific audiences on the social network based on their offline purchases. Zuckerberg said he was optimistic that Graph Search would be rolled out widely in the coming months, but offered few details on usage so far.

Facebook is also reported to be close to expanding video advertising on the site. Asked about the company’s video advertising strategy during the earnings call, COO Sheryl Sandberg said Facebook continues to “explore new things” but that there was nothing to announce. Stay tuned.

After closing at $27.43 on Thursday, Facebook shares were essentially flat in after-hours trading following its earnings report. 

 
 
 
 

 

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