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Facebook’s advertising revenue soars in 3Q

October 28, 2014

The steady increase indicates that Facebook has succeeded in steering advertisers to its mobile platform at a time when most of its users are using Facebook on phones and tablets.

NEW YORK (AP) — Facebook grew its advertising revenue by 64 percent in the third quarter, helped by a boost in mobile ads that are becoming an increasingly large chunk of the social networking giant’s overall advertising business.

The steady increase indicates that Facebook has succeeded in steering advertisers to its mobile platform at a time when most of its users are using Facebook on phones and tablets. Investors were initially worried about the desktop Web era-born company’s ability to succeed in mobile advertising, but those concerns are long gone.

Advertising revenue at the company totaled $2.96 billion. Mobile ad revenue, a closely watched figure, was $1.95 billion, or 66 percent of Facebook’s total advertising revenue for the quarter. That’s up from 62 percent in the second quarter and 59 percent in the first three months of the year. The 10-year-old company began offering mobile ads in 2012.

Now, Facebook is expanding into highly lucrative video ads, and earlier this year re-launched Atlas, a tool for marketers to better target people across “devices, platforms and publishers” and to measure how well the ads work.

The Atlas move and the acquisition of LiveRail, an online video advertising platform signal that an “important shift is under way at Facebook,” says Debra Aho Williamson, an analyst at research firm eMarketer. Facebook is “becoming much more ambitious in offering digital services far beyond what the company was initially created to do as a social network.”

The company has been on a roll lately, and its stock hit an all-time high of $81.16 on Tuesday before the results came out. That’s more than double its initial public offering price of $38. Both the troubled IPO and the company’s lagging stock price seem like a distant memory. Still, Facebook has had to be vigilant in attracting new users, especially outside the U.S., and ensuring that existing members return day after day.

Facebook had 1.35 billion average monthly users as of Sept. 30, an increase of 14 percent from a year earlier. Daily users totaled 864 million, up 19 percent. Mobile monthly active users, meanwhile, were 1.12 billion, up 29 percent from a year earlier.

While Facebook has been growing its share of the worldwide digital advertising market, it’s still a long way from catching up to rival Google Inc. In 2013, Facebook had a nearly 6 percent share of the market compared with Google’s 32 percent, according to eMarketer. This year, Facebook is expected to grow its slice to nearly 8 percent, while Google’s should decline slightly, to just below 32 percent.

Overall, Facebook earned $802 million after paying preferred dividends, or 30 cents per share, on revenue of $3.2 billion. Adjusted earnings and revenue both beat Wall Street’s estimates.

The Menlo Park, California-based company’s stock slid 96 cents in extended trading.