Facebook CEO Mark Zuckerberg wanted to do a little myth-busting on his company’s second earnings call, and the biggest target was the idea that it didn’t know how to make money on mobile. Zuckerberg’s basic sentiment: we’re doing real revenue on mobile and we’ve only been at this for less than a year.
Facebook said mobile ad revenue for the third quarter was 14 percent of all ad revenue, or $153 million. That’s after introducing sponsored stories in February and more recently rolling out mobile app install ads for developers who want to promote their apps. Both of those ads show up in the newsfeed for Facebook’s mobile apps and website, which don’t include traditional banner ads on the right column.
Sheryl Sandberg, Facebook’s chief operating officer, said mobile users were engaging with those mobile ads eight times more often than desktop ads and brand recall was 10 times as good. And David Ebersman, Facebook’s chief financial officer, said news feed ads are now generating $4 million a day in revenue, with 75 percent of that from the mobile newsfeed. That’s up from $1 million a day at the end of the second quarter, with half of it from mobile.
Mobile newsfeed ads, with their higher engagement and better placement, are also commanding higher prices, which helped boost the price of ads by 7 percent overall for Facebook in the third quarter and 20 percent in North America. And so far, the increased mobile ads have not appeared to have an impact on user experience, Sandberg said.
And given that mobile users are more likely to come back to Facebook on a daily basis than desktop users, mobile ads could ultimately be a bigger businesses than desktop advertising, said Zuckerberg.
“We’re just getting started with mobile products and monetization. We can reach more users (through mobile), those users visit more often and I think we will make more money,” said Zuckerberg.
Zuckerberg has ordered each product group to come up with their own mobile monetization tools. He’s especially jazzed about products like the app install ads, which are the first wholly mobile ads for Facebook.
Facebook still has a lot to do make a lot of money on mobile. With 604 million monthly users visiting via mobile, Facebook needs more than 14 percent of its ad revenue to come from mobile. But the early results suggest Facebook is starting to figure it out.
But the real question is how many ads will users take inside their Facebook experience. I’m noticing more and more ads in my mobile newsfeed, but it’s tolerable for now. If Facebook really starts cranking out more ad units, it’s going to be tougher for consumers to flick on by them. Even with better targeting and relevance, there’s only so much real estate in mobile. Getting the ads into the newsfeed was a necessary step but we’ll have to see how much Facebook can jam in there before it turns people off.