Mobile ad spending leaps at Facebook

Q3 financial results show mobile marketing revenue now represents nearly 50 per cent of total advertising sales

Facebook has highlighted growth across its three target marketing segments – mobile engagement, number of marketers on Facebook and product development – in its latest third quarter financial report.

Leading its advertising efforts were new gains in monetising the mobile business, which drove nearly 50 per cent of advertising sales in the three months to 30 September, the company reported. Facebook's mobile advertising sales have risen from 23 per cent of total revenue in 2012's fourth quarter, to 41 per cent last quarter and now 49 per cent.

Total advertising revenue for the quarter reached US$1.8 billion, up 66 per cent year-on-year, against a total revenue of $2.02bn, according to the earnings announcement. This was up 60 per cent compared to $1.26 billion during the same period last year. The sales figures topped expectations of $1.91 billion, based on projections of analysts as polled by Thomson Reuters.

Profits were strong, too. Net income for the quarter was $425 million on earnings per share of $0.17, compared to a net loss of $59m and a loss per share of $0.02 during the year-ago period.

Mobile is a critical area of Facebook's business as more Internet users migrate away from the desktop in favour of devices like smartphones and tablets. Driving advertising on mobile can be challenging for Internet companies, but Facebook has been making inroads. The mobile gains reported Wednesday show a continuation of steady mobile advertising growth since late last year.

The company stands to grow its mobile advertising sales further, given the launch of products like ads on Instagram, the popular photo sharing app owned by Facebook. In an earnings call, Facebook COO, Sheryl Sandberg, pointed out Facebook including Instagram now gets one in five minutes spent on mobile, against one in eight minutes being spent by users on desktops.

Earlier this year, Facebook said building mobile products would be a focus for 2013. Examples include the launch of mobile app ads for engagement, along with enhanced measurement capabilities for the telco industry through the Outcome Measurement product.

Other advertising product development highlighted by Sandberg during the earnings call include improving ad targeting through new products such as Customer Audiences and Partner Categories, along with the overhaul of its ad create tool.

Sandberg said Facebook is also working on tools to help prove Facebook’s higher value in a multi-touch attribution marketing model. According to a recent study from Facebook PMD, Kenshoo, Facebook is undervalued by up to 30 per cent in a last-click attribution model.

To illustrate the rise in marketers using Facebook, Sandberg also said the number of Facebook advertisers in EMEA nearly equalled the number in North America for the first time in Q3.

"The strong results we achieved this quarter show that we're prepared for the next phase of our company, as we work to bring the next 5 billion people online and into the knowledge economy," Facebook CEO, Mark Zuckerberg, said in a statement, referring to the company's campaign.

Facebook also grew its monthly active users during the quarter to 1.19 billion, an increase of 18 per cent compared to last year. On a monthly basis, many of the company's users -- 874 million -- are also active on mobile, it claimed.

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