• by Mark Walsh  @markfwal, January 11, 2013

Facebook has been rewarded for building up its mobile ad business in the second half of 2012 with higher revenue and renewed investor confidence, symbolized by its share price cracking $30 for the first time in six months on Jan. 9.

But Brian Wieser, senior analyst at Pivotal Research Group, warns in a research note that the mobile ad gains will come at a price over time: higher costs incurred in mobile campaigns compared to those on the desktop. He estimates that mobile monetization and other costs of increasing growth, even excluding acquisitions like Instagram, will grow to about $2 billion a year.

With Facebook already Pivotal’s year-end 2013 price target of $30, Wieser lowered his rating on the company from “buy” to “hold,” noting that the stock “had a good run to back up this value, leading to the change in recommendation.”

Helping to drive the stock’s run up from a low of under $18 in September has been the dramatic rise in Facebook’s mobile revenue, to $150 million in the third quarter from only about $10 million in the prior quarter. Wieser himself projects the company’s mobile ad products will end up generating $1 billion in revenue this year and acknowledges that mobile advertising is favorable for Facebook in “the near-term.”

Still, he raises concerns with higher costs associated with the emerging ad category. In particular, he points out that mobile-centric campaigns are typically more labor-intensive than traditional Web efforts.

He add that if Facebook’s mobile revenue growth is coming from an increase in mobile campaigns -- including new segments of marketers like mobile apps -- that makes things even more problematic. The shift toward “mobile first” in marketing initiatives could mean smaller campaigns (in dollar size) and lower CPMs.

“Even if CPMs were higher, the absolute volume of impressions delivered will be much lower than on the desktop," according to Wieser.

For their part, Facebook and its ad partners have touted the superior performance of formats like Sponsored Stories in mobile compared to on the Web, in terms click-through rates and eCPMs. And both AdParlor and Nanigans recently highlighted promising results for newer app install ads that run in the mobile news feed.

Wieser points out that some of the risks around higher costs are mitigated by automation, although it’s difficult to say how much.

The Pivotal report notes that Facebook doesn’t usually assign a rep to a marketer spending less than $2,000 a month. So smaller campaigns are automated. But those at higher levels might have multiple campaigns running on Facebook, with separate costs. “More importantly, we suspect costs will build upon costs as the company iterates its product offering and establishes new workflows for those new products,” it stated.

For agencies and ad-tech players, of course, that’s not necessarily bad news. “More volume of activity from labor intensive media, such as that which is delivered to mobile devices, will be mostly good for agencies,” Wieser wrote, with the same going for technology firms relied on by publishers and agencies.

In launching its combined desktop/mobile reporting in November, comScore said Facebook ranked as the top property in terms of total engagement in the mobile channel.

In a separate report last week, JP Morgan analyst Doug Anmuth projected Facebook’s mobile ad revenue will outpace that of desktop revenue by 2014. Impressions from Facebook’s Web ads on the right side of the page are expected to decline 6% a year through 2015 as usage increasingly shifts to mobile devices.