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Mobile. It’s Facebook’s biggest risk as well as its greatest opportunity. The social network tried to stress the latter in its first-ever earnings call by sharing with investors and analysts that it’s now making roughly $500,000 a day from mobile ads.
“By the end of June, Sponsored Stories in News Feed was at a run rate of over $1 million per day in revenue, and about half of that is coming from mobile,” Facebook CEO and founder Mark Zuckerberg said on the call. Socializing the News Feed gives Facebook a clear path to building a strong business on mobile, he added.
Sponsored Stories, or status updates that double as advertisements, were added to the web and mobile News Feed back in June. Already, these ad units have become the cornerstone of Facebook’s mobile monetization strategy, COO Sheryl Sandberg said.
“As measured by click-through rates, Sponsored Stories in News Feed perform multiple times better on both desktop and mobile than ads in the right-hand column,” she said.
Both Zuckerberg and Sandberg tried to dispel the notion that Facebook will have trouble monetizing its massive user gains on mobile. Mobile continues to be the fastest growing area for the company; the social network hit 543 mobile monthly active users and posted year-over-year growth of 67 percent.
“On average, mobile users are around 20 percent more likely to use Facebook on any given day,” Zuckerberg added.
Mobile growth is way up and revenue is on its way. Facebook, thanks to Sponsored Stories, must have mobile all figured out then. Not exactly.
“We know that real estate is limited in mobile environments and Facebook is laser-focused on the user experience,” Altimeter Group digital advertising and media analyst Rebecca Lieb told VentureBeat. “Sponsored Stories are converged media: a blend of paid (advertising) and owned (content). What I believe Sandberg is saying is that mobile will be monetized by advertising heavily tempered with softer, less intrusive forms of marketing — like compelling content. Will that be Sponsored Stories in its present form, or will the model evolve? Time — as well as revenue and data — will tell.”
Sponsored Stories in the News Feed look like an early hit for the company, but Wall Street isn’t ready to buy the hype.
Facebook narrowly beat expectations by posting $1.18 billion in revenue for the second quarter. The small win, however, read like a disappointment, and investors punished the stock by sending it to new lows in after-hours trading.
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