Last week, Facebook revealed that its ads on mobile devices accounted for 41 percent of its overall $1.62 billion in ad sales in the second quarter, up from 30 percent in the first quarter.
Shares of Facebook rose nearly a third last Thursday as mobile ad strength led earnings and revenues to far exceed projections. It also erased some concerns for Twitter, Pinterest, Snapchat and others websites that mobile advertising would be inherently less lucrative than traditional desktop PC advertising due to the smartphone's teeny screen size and social media fans' aversion to any ads.
With mobile ads now accounting for five percent of Facebook's newsfeed, the limited range of ads has apparently not pestered fans enough to stop them from engaging with other content on the social network. Facebook's monthly active users on mobile skyrocketed 51 percent to 819 million during Q2.
"The reason Facebook can do it is, the rest of the content that's there is so engaging that you don't mind one out of every 20 ads," Hussein Fazal, CEO of AdParlor, which manages advertising campaigns on Facebook, told Reuters. "If you have a newsfeed that's not so engaging, and you keep seeing ads, then it doesn't work."
Facebook said it has more than one million active advertisers, including all of the biggest global brands — double that of a year ago. Pricing on mobile ads for Facebook is similar to desktop, surprising many given Google's challenges there.
Personalizing ads to timeline interests are said to help make mobile ads more relevant. On a conference call with analysts, CEO Mark Zuckerberg noted that Facebook will be investing more in improving ad quality. A particular focus will be on expanding the number of marketers and overall demand in its system rather than just increasing the number of ads shown.
He added, "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."
COO Sheryl Sandberg noted that mobile represents just two percent of ad spend globally and three percent in the U.S. but people are spending "dramatically" more time checking their feeds on their mobile devices.
"As Facebook delivers personalized experiences to over 1.1 billion people, we also have a unique opportunity to deliver a more personalized advertising experience," said Ms. Sandberg. "As I meet with the marketers all around the world, I find more and more that they are understanding the benefits of this opportunity."
- Facebook Second Quarter Earnings Release - Facebook
- Facebook Quarterly Earnings Slides Q2 2013 - Facebook
- Facebook Second Quarter Transcript - Facebook
- Facebook offers the dummy's guide to mobile advertising - Reuters/Baltimore Sun
- How Facebook Mastered Mobile Ads (and Publishers Can Too) - Advertising Age (tiered sub.)
- Facebook Is Erasing Doubts on Mobile - The New York Times (tiered sub.)
- Facebook Mobile Swells to 41% of Its Ad Sales Digital giant's Q2 revenue - Adweek