Facebook Sees 23% Mobile Ad Jump in Q4 2012

Heading off critics who have said that Facebook is not a mobile-first company, the social media behemoth yesterday reported that mobile advertising revenues grew 23 percent in the fourth quarter of 2012.

At its Q4 2012 earnings press conference yesterday, Facebook announced gains in its advertising business of 41 percent over Q4 2011 to total $1.3 billion, or 84 percent of total revenue. Of that, 23 percent was mobile ad revenue, up from 14 percent the previous quarter.

“Today there is no argument: Facebook is a mobile company,” said CEO Mark Zuckerberg on the earnings call, pointing out that a year ago those revenues were zero percent.

Overall, Facebook beat analyst expectations with total revenues of $1.585 billion in the fourth quarter, which also includes payments and other fees. Net income was up year on year for the quarter to $548 million, compared to $523 million in the fourth quarter the previous year.

COO Sheryl Sandberg also said that Facebook continues to work on all fronts with brand marketers, direct response advertisers, local businesses and developers. The company said that the use of promoted posts had nearly doubled revenue from local business pages since the beginning of 2012, for example. The posts make it easier for businesses to create and purchase ads directly from their Facebook Page. Facebook Exchange, which claims to give brands access to new, higher-quality sales leads, also served one billion impressions daily since its launch in September.

Sandberg was also keen to point out high profile brands that were successfully using Facebook as an ad platform. She mentioned Walmart, which showed 50 million mobile ads to consumers over the Thanksgiving weekend in 2012, and Michael Kors, which used Facebook to launch a new line of sneakers that reached 36 million people that resulted in a 16-point increase in awareness for the shoe. Pepsico also saw a 5x return on advertising spend for their “Do Us a Flavor” campaign, according to Facebook.

There was also a trend among companies to increasingly use the newsfeed, rather than simply direct response ads, to get their message across. About 65 percent of its advertisers used desktop and mobile newsfeed ads in the fourth quarter, up from 50 percent at the end of the third quarter. According to Datalogix, ads in news feed also drive more than 8 times the incremental offline sales than ads on the right hand side.

“There is a clear shift away from the right hand rail to desktop and mobile newsfeeds,” agreed Lucy Jacobs, COO of Spruce Media, a Facebook marketing management firm, which took a look at ad pricing trends on Facebook for the quarter.

In Q4, prices rose in the desktop newsfeed by 35 percent, indicating increased competition to appear in the feed at holiday time newsfeed, according to Spruce. However, prices fell in the mobile newsfeed, due to increased supply of mobile ads inventory available on platforms such as iPhone 5 and iOS 6. Spruce looked at 18 billion impressions across 113 countries from Q3 2012 to Q4 2012.

Spruce also found that clickthrough rates were up by 34 percent and 49 percent respectively in mobile and desktop over the previous quarter, indicating that Facebook is making sure that ads are shown to people who are most likely to be interested in them.

“Facebook is doing a better job since the IPO of growing monetization,” said Jacobs. She sees further such possibilities using the newly announced Graph Search, which will allow people to search their friends’ recommendations, as well as Facebook’s photo sharing app Instagram. Mobile users searching for a restaurant recommendation from a friend, for example, could be served hyper-local ads for restaurants on their devices.

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