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Facebook Ad Revenue Doubles Amid Mobile Surge

  |  July 25, 2013   |  Comments

How important is mobile to Facebook? Consider this: mobile ads represented about 41 percent of the company's advertising revenue and mobile usage accounted for 71 percent of monthly active users (MAUs) during its latest quarter.

"When it comes to mobile I'm very pleased with the results," says Mark Zuckerberg, chief executive of Facebook, as he kicked off the earnings call. "Nearly half a billion people use Facebook on their phones everyday and soon we’ll have more revenue on mobile than on desktop as well,” he adds.

Facebook closed the final quarter of its first year as publicly traded company with a 51 percent increase in mobile MAUs and a 21 percent overall increase in MAUs from the comparable year-ago period. The overall share of revenue contributed by mobile grew from 30 percent in the previous quarter.

The company banked $333 million in net income on a 61 percent year-over-year increase in revenue of $1.81 billion. Total advertising revenue hit $1.6 billion, capturing 88 percent of all revenue and jumping 61 percent from the year-ago quarter. The US and Canada accounted for $721 million, or 45 percent of all ad revenue, followed by Europe with $451 million, Asia with $225 million and the rest of the world driving $202 million in revenue from ads.

"We now have more than a million active advertisers," says Zuckerberg, adding that Facebook's group of advertisers has more than doubled in the past year. With more brands using the platform, users are taking notice as the overall number of ads increases in kind. "Right now ads on average make up 5 percent, or one in 20 stories in the news feed," he says.

“In recent studies, people have told us that they noticed the ads more, so we're going to invest more in improving the quality. Our top priority is to expand the number of marketers and overall demand in our system rather than just increasing the number of ads that we show,” notes Zuckerberg. “We believe that this will help us improve the quality of the ads that we show by creating a more competitive auction and this will create the best experience for people who use our products, the best returns for more marketers and the best results for us,” he adds.

The importance of news feed ads on Facebook’s bottom line could not be understated. Indeed, chief financial officer, David Ebersman, indicates that Facebook expects news feed ads to be the main driver of revenue throughout the remainder of the year.

Facebook’s chief operating officer, Sheryl Sandberg, says marketers are increasingly recognizing the “big brand opportunity” that Facebook is building. “We offer discovery and we have a unique opportunity to take people all the way through the funnel,” she says.

“T-Mobile did an ad campaign with us to attract people to sell new phones. They used our offer ads to do it and 9 percent of the people who claimed the offer converted to T-Mobile within 10 days. They had over 20 times return on their ad spend which is just incredibly strong in the industry and I think that shows the power of what we can do with impressions, taking people all the way through the funnel,” Sandberg adds.

Facebook’s ad products are delivering “impressive ROI” for marketers, according to Sandberg, leading to growth across all four of the site’s key segments – brand, direct response, local businesses and developers. In addition, direct-response marketers are taking advantage of the social media giant’s high click-through rates and competitive click-to-calls to grow their business.

“These marketers are typically very measurement-focused and they quickly increase their budgets as we deliver compelling ROI,” says Sandberg.

Finally, Facebook says time spent per person on the site continues to increase, exceeding 20 billion aggregate minutes per day last month.

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Matt Kapko

Matt Kapko has been writing about mobile since 2006, before it became cool. Based in Long Beach, CA, he has covered mobile entertainment, digital media, marketing, and advertising for several business media outlets. A former editor and reporter for RCR Wireless News, paidContent, and iMedia Connection, Matt is a regular freelance reporter for ClickZ. You can follow Matt on Twitter at @MattKapko or drop him a line at matt@kapko.co.

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