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Sponsored Stories Rake in $1M Each Day, Says Facebook

  |  July 26, 2012   |  Comments

Facebook reported Q2 earnings, banking on mobile sponsored stories to satisfy investors.

All eyes and ears were on Facebook this afternoon as the highly-scrutinized social media powerhouse revealed its second quarter earnings, marking its first quarterly earnings call ever. The company reported $992 million in ad revenue in Q2 - 84 percent of total revenue and a boost of 28 percent since Q2 2011. Despite the high rate of growth, the firm's overall take of $1.18 billion in revenue is a far cry from its current $60 billion valuation.

In particular, observers are focused on Facebook's ability to monetize its rapidly growing mobile platform. Its mobile monthly active users reached 543 million, a boost of 67 percent since Q2 last year. All together, monthly active users reached 955 million, an increase of 29 percent year-over-year.

Facebook recognizes the focus on mobile, and CEO Mark Zuckerberg began today's call with investors by noting the mobile user growth. As the firm's mobile users have grown, the overall number of ad impressions served fell 2 percent, said Facebook, mainly because the mobile platform still features few ads.

But Zuckerberg indicated the company is dedicated to better monetizing the mobile usage explosion. Because mobile users spend so much time on their news feeds - where Sponsored Stories ads appear in the mobile platorm - said Zuckerberg, the company sees the social ad format as "a clear path to building a strong business on mobile."

Around half of the money generated from Sponsored Stories each day is from mobile, said Zuckerberg, who pegged the daily Sponsored Stories take at $1 million. Sponsored Stories result in stronger click-throughs and higher ad prices than other formats, the company said, though it wouldn't go into further detail.

Since its disastrous IPO and news that General Motors would drastically reduce its ad spend on Facebook, the company has been on a PR tear, touting new ad opportunities and quietly testing others.

Though Facebook is hyping its mobile Sponsored Stories, other new Facebook ad ventures don't include mobile at this stage. For instance, its new real-time ad exchange will not offer mobile inventory to Facebook's DSP partners. "Since RTB is currently only standard marketplace ads, this means they can't appear on mobile at this time because they can't appear in News Feed," a spokesperson told ClickZ when the exchange was announced in June.

On the desktop in Q2, Facebook began experimenting with rotating marketplace ads on static pages to optimize ad serving when users don't click on the first crop of ads displayed on a page. The move could result in better CTRs and possibly higher ad rates for its right-rail marketplace ads.

Facebook is also taking its time with the Sponsored Stories and social ads rollout, in part to ensure they aren't considered obtrusive by users. "Fewer than half of the ads served by Facebook today are social," said Facebook COO Sheryl Sandberg, noting, "ads that are social have higher engagement rates for users."

There was a "relatively limited amount of volume" of Sponsored Stories ads on desktop and mobile in Q2, said David Ebersman, CFO of Facebook.

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ABOUT THE AUTHOR

Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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