Ka-ching! Mobile ads cranking $1.1B a year for Facebook
Facebook's efforts to make money from mobile are young -- but the payoff already looks big.
Paul SloanFormer Editor
Paul Sloan is editor in chief of CNET News. Before joining CNET, he had been a San Francisco-based correspondent for Fortune magazine, an editor at large for Business 2.0 magazine, and a senior producer for CNN. When his fingers aren't on a keyboard, they're usually on a guitar. Email him here.
Facebook's stock is on a tear today, poised to post its biggest one day gain since it went public in May. This comes a day after the company's strong third-quarter earnings report and, perhaps more importantly, its upbeat call with analysts in which CEO Mark Zuckerberg said flat out, "I want to dispel this myth that Facebook can't make money on mobile."
While Zuckerberg and his top execs stressed that Facebook is in the early days on this front -- it only started trying to make money from mobile in March -- they did share some numbers to back up just how well things are going. What it adds up to is that Sponsored Stories alone, which are the ads that appear in news feeds the way a post from a friend would, are generating more than $1 billion in revenue a year from mobile, and the figure is growing fast.
Here's the crucial detail from CFO David Ebersman: "We ended the third quarter with more than $4 million a day coming from Feed and about three-quarters of that coming from mobile Feed."
So that means $3 million a day from mobile, equal to an annual run-rate of $1.1 billion. Compare that to a few months ago, however, and it's easy to see how that the $1 billion plus number could seen be small. In late June, Sponsored Stories were generating about $500,000 a day from mobile devices. That's a 500 percent jump. While those percentage gains won't continue as the business grows, no one can look at those numbers and say that Facebook isn't working hard to make money from its 604 million mobile users.
All told, mobile ads generated about $150 million for Facebook in the quarter, roughly 14 percent of its total ad revenue. But mobile is where the push is. Facebook didn't reveal details, but it's been testing a mobile ad network in which it sells targeted ads to mobile sites and apps outside of Facebook. And Zuckerberg spoke enthusiastically about its Mobile App-Install productthat lets developers buy ads mobile News Feeds as a way to drive more people to their apps. Facebook gets a bounty for each download.
"I'm excited about this because it helps developers with one of the biggest problems they face," said Zuckerberg. It also helps Zuckerberg with one of the biggest problems he's faced as the world goes mobile.