Mobile To Power Facebook Gains

Facebook may not have launched video advertising yet, but the social networking giant is expected to report solid third-quarter financial results on Wednesday.
Thanks largely to its booming mobile advertising growth, Wall Street analysts, on average, project Facebook will post a 50% gain in revenue to $1.89 billion from a year ago. Profit is expected to come in at 18 cents a share, up from 11 cents a year ago.
Of that revenue total, JP Morgan analyst Doug Anmuth expects $842 million -- or about 45% -- to come from mobile advertising. That would mark a slight increase from the 41% in the second quarter and reflects how mobile has become the focus of Facebook's ad business over the last year.
The ad dollars are following eyeballs. In the prior quarter, 819 million of Facebook’s 1.15 billion users worldwide were mobile monthly active users. Facebook easily had the most popular smartphone app, with 76% reach, and had the second-highest reach after Google across the mobile Web and apps at 85%.
On the ad side, ads in the mobile news feed have outperformed news feed and traditional right column ads on the desktop. That pattern continued in Q3, with mobile-only news feed ads generating a click-through rate of 1.6% compared to 0.74% the same ads on the desktop, and 0.11% for Facebook advertising overall, per data from Facebook ad partner Spruce Media.
At the same time, mobile CPMs dipped in the third quarter after surging 25% from the first to second quarters. The average mobile CPM declined 10% to $4.03 from $4.48 in the second quarter, suggesting that demand has leveled off with the expansion of mobile inventory. Desktop CPMs, meanwhile, increased 6% to $4.38, helping to offset the mobile price dip.
With Facebook proving it can sell mobile ads, the question of when the company will finally introduce video advertising remains a matter of speculation. An AllThingsD report last week said Facebook has pushed back the debut of TV-style spots until next year following prior delays as it works on getting the user experience right.
Facebook was tight-lipped about its video ad plans during the second-quarter conference call; it is not likely to say much more about the topic on Wednesday. While video is seen as the next big ad format for Facebook to exploit, marketers still have concerns about user reaction to autoplay ads in the news feed.
A new report by Forrester analyst Nate Elliot this week faulting Facebook as a marketing platform may also provide a talking point for the company’s earnings call. The report suggested brands are using Facebook for marketing but aren’t especially pleased with the results.
A Forrester survey of 395 marketing executives in the U.S., U.K. and Canada showed that Facebook scored lowest in satisfaction among about a dozen online marketing tactics and sites, including LinkedIn, Twitter, Google+, and YouTube.
"While lots of marketers spend lots of money on Facebook today, relatively few find success," wrote Elliot in the report, which also accused the site of abandoning the promise of social marketing in favor of traditional online ad models that marketers hoped it would replace.
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