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Facebook reports half of $1M per day run rate for Sponsored Stories comes from mobile

The mobile industry got a much-anticipated peak at how Facebook?s nascent advertising efforts are performing when the company reported its first quarterly financial results yesterday since going public. The initial numbers are promising, with Facebook revealing the approximately half of the $1 million per day run rate it is seeing for Sponsored Stories is coming from mobile.

Social media giant Facebook has been under a lot of pressure since going public a couple of months ago to prove that it can effectively monetize its platform, especially in mobile, as use is growing faster here than on desktop. Given Facebook?s broad use, the key is coming up with an effective way to reach consumers in mobile, something it may have accomplished with Sponsored Stories.

?We recently began rolling out Sponsored Stories and are seeing a run rate of $1 million per day,? said Mark Zuckerberg, founder and CEO of Facebook, Menlo Park, CA, during a conference call to discuss the results. ?About half is coming from mobile ? this is encouraging in our efforts to derive revenue from mobile.

?Mobile is a huge opportunity for Facebook,? he said.

?Our goal is to connect everyone in the world and we expect four to five billion people to have smartphones in the next few years. Building great services for them is essential for us to connect them."

Mobile growth outpaces desktop
The number of Facebook mobile monthly active users continues to grow and numbered 543 million at the end of June, an increase of 67 percent year-over-year. Overall, the number of active users increased 29 percent for a total of 955 million.

The company also said that mobile users provide an opportunity to deliver more engaging experiences.

?We have found that people who use mobile services are more active Facebook users,? Mr. Zuckerberg said. ?On average, they are 20 percent more likely to use Facebook on any given day.

?This provides an opportunity to provide more valuable deeply engaging experiences on mobile,? he said.

Facebook is investing heavily in improving its apps across iOS, Android and the mobile Web, per Mr. Zuckerberg.

For the second quarter ending on June 30, Facebook reported that revenue from advertising was up 28 percent from a year ago for a total of $992 million.

During the same period, revenues totaled $1.18 billion, up 32 percent from a year ago.

The company also posted a net loss of $157 million, compared with a net income gain of $240 million a year ago.

During the second quarter, Facebook introduced a new Facebook Camera app for iPhone, an improved version of the mobile messenger app for both iOS and Android, launched global App Center where users can discover relevant apps for mobile and Web.

The company also expanded its rollout of Sponsored Stories in News Feed and enabled advertisers to buy Sponsored Stories in mobile News Feed.

Also revealed as part of the financial results was independent ROI data from more than 60 advertising campaigns, showing that 70 percent of campaigns resulted in a return on ad spend of three times or better and 49 percent of campaigns showed a return on ad spend of five times or better.

?Mobile is one of the most important facets of Facebook?s business,? said James Borow, co-founder and CEO of GraphEffect, Santa Monica, CA.

?The shift from desktop to mobile is massive and Facebook has to be proactive about monetizing their almost one billion users as effectively on a five-inch screen as they have been able to on a laptop,? he said.

?The trade off is that with mobile, you can interact with users more often, but have less real estate for ads. That is a dynamic that Facebook needs to capitalize on if they want to sustain the growth we
have seen over the past few years.?

Considering that Facebook?s mobile ad product is still new, the results look promising. Several recent reports indicate that click-through rates are significantly higher than desktop.

Advertisers may be attracted to Facebook?s mobile ad offering because it places them directly in a user?s News Feed.

?Reaching someone directly in the newsfeed is an incredibly engaging and unique offering,? Mr. Borow said.