Facebook is moving forward with plans for its mobile advertising platform even after concern from users about an oversaturation of advertising and receiving unwanted messages.

Sheryl Sandberg, Facebook’s chief operating officer, told reporters today the goal of the advertising platform is to increase engagement and usefulness of advertising, not necessarily increase the number of ads users receive. She noted that the mobile platform may soon become more important than television.

With the recent launch of Facebook Home, a special OS skin for Android users, and the social network raking in 30 percent of all mobile ad spending in 2013, Facebook is clearly planning to capitalize on the opportunity mobile presents.

Last year, U.S. mobile ad spending increased from $1.45 billion to $4.06 billion in 2012 alone, according to data from ad analysis firm eMarketer. This growth presents a 180 percent increase in mobile ad growth, which was driven almost entirely by Facebook. At the beginning of 2012, Facebook wasn’t even in the mobile advertising market, but the company grew its mobile ad revenue to $340 million in one year. That revenue is projected to more than double in 2013.

Mobile devices are in almost every consumer’s hand, opening a door for advertising opportunities that will allow companies to cash in on our always-on lifestyle. According to Sandberg, Facebook is pleased with the company’s advertising platform so far and will continue to monitor engagement to best get messages across.

Users already see plenty of advertising on Facebook, from sponsored stories and posts from brands you don’t currently follow to finely targeted advertising in news feeds on both mobile and desktop applications. Facebook’s new software released this year will surely please marketers and advertisers, but the affect on users remains to be seen.

Image credit: Facebook

Facebook’s earnings just hit the wire, showing $1.585 billion for the quarter and a grand total of $5.1 billion for all of 2012, narrowly beating estimates of $5 billion.

But the real standout line item was mobile advertising revenue — the most hotly anticipated and debated figure in Facebook’s books and the one where Facebook far outstripped any forecasts.

Here’s a quarter-by-quarter look at Facebook’s revenues over the past two years:

Obviously, the majority of this comes from advertising — and with its new Graph Search, Facebook is poised to take an even larger share of that market from reigning champion Google. In fact, Facebook CEO Mark Zuckerbrg said in today’s earnings call that he considers Graph Search the company’s most important product from the past 12 months and that he looks forward to building Graph Search into a meaningful part of Facebook’s business.

Online ads in the U.S. were a $10 billion market in Q4 2012, with Facebook taking home $1.33 billion of that — 13.3 percent of the total market. Advertising made up 84 percent of the company’s total revenue and increased 41 percent year-over-year for Q4.

News Feed ads “turned out even better than we thought,” said Zuckerberg. He said the company is working on more innovative and effective ad products. Facebook COO Sheryl Sandberg also noted that 65 percent of Facebook’s advertisers are using News Feed ads, which also run in mobile interfaces.

Mobile ads and revenues

As for mobile figures, mobile monthly active users were up to 680 million at the end of 2012, a 57 percent hike year-over-year. Mobile revenue made up nearly one quarter of all ad revenue in Q4 — a (relatively) huge $306 million.

While the analysts at eMarketer pretty much nailed their figures for 2012 revenues, they were surprised at how fast the social network’s mobile revenue has grown.

“The company outperformed expectations again — by a wide margin,” an eMarketer told VentureBeat today via email. “With 25 percent of revenue going to mobile in the fourth quarter, Facebook has cemented its position as the leader in mobile display advertising in the U.S. by a wide margin.”

Facebook’s entry into mobile advertising was a big part of the entire segment’s boom last year, an overall 180 percent increase in mobile ad spend in the United States.

eMarketer estimates that Facebook took home more U.S. mobile display revenue than any other mobile ad publisher in 2012, up to and including rival Google. The firm estimates Facebook earned 18.4 percent of the total U.S. mobile display ad market, up from 17 percent last year.

“The social networking giant offered no mobile ad opportunities at the beginning of 2012 but grew its mobile business at an astonishing — and unexpected — rate,” said an eMarketer rep.

“Before Facebook’s Q3 earnings call, most researchers and analysts expected U.S. mobile ad revenues of roughly $45 to $100 million, according to figures examined by eMarketer. While the company’s total ad revenues were, for the most part, unsurprising, the share of revenues attributed to mobile advertising was far from it.”

Share prices

Analysts had previously forecast Facebook’s 2012 revenues at $5 billion, a significant decrease from a previous $6 billion estimate. Facebook had underperformed analysts’ expectations in the first two quarters of 2012, and with the downgraded annual revenue estimate, share prices dipped below $18.

This morning, the company’s shares were trading at $31.28, their highest price since the stock’s nosedive came to a slow halt last fall. In after hours trading, prices dropped slightly to $30.71. Take a look at Facebook share price performance over the last six months:

This kind of uptick has put Facebook stock squarely in the “most improved” category for consumer-facing tech companies, with share prices rising around 35 percent in the past six months:

Shares have been closing above 13-day and 50-day exponential moving averages (EMAs), indicating bullish performance for the near future.

The company’s initial public offering saw shares trading in the low to mid-$40s before the bell; throughout the day and the months to follow, share prices dropped dramatically. However, as many analysts and investors pointed out, Facebook was and is still at the beginning, both in terms of share price and revenue.

“This is an eight-year-old company,” pointed out Rebecca Lieb, an Altimeter Group analyst. “When Google went public, they had only recently developed ad products. Facebook is at the beginning of mobile products, advertising products — and it hasn’t even started with commerce products.”

“Facebook has just scratched the surface of its revenue and advertising,” said Menlo Ventures managing director Mark Siegel. “They’re going to grow with a much more diverse income stream than what they have today.”

And speaking of diverse revenue streams, let’s take a closer look at one of the stars of today’s show: Facebook’s mobile revenue.

Gifts

Another entirely new line item on Facebook’s budget is Gifts, which the company launched to a small group of users near the beginning of Q3 2012. Initially, the service, which let users send physical gifts to one another and let Facebook keep a small cut of the profits, seemed like a great addition to Facebook’s revenue streams.

“Gifting is a very unique form of e-commerce, and we thought there was a lot more innovation that could be going on there,” said Gifts creator Lee Linden in a recent VentureBeat interview. While he couldn’t get specific about how much Facebook takes in the transactions, he did say, “We’re starting with the U.S., and we’ll evaluate in the future what makes sense,” indicating that the company does plan to go global with the new e-commerce product.

“I think these can be big opportunities for us in the long term,” said Zuckerberg, “but for the next year at least, our work around ads will have by far the biggest impact on our business.”

Why bother uploading photos when Facebook can do the work for you?

The social network today added a feature called “Photo Sync” to its iPhone and Android applications that automatically syncs your phone’s camera roll to a private album for bulk sharing whenever the mood strikes — no manual uploads required.

Facebook first started testing the automatic photo uploader in August on Android, and later on iOS. Today, people with the most current version of the Facebook for iOS or Android application can participate in the frictionless upload process.

The feature, which makes a seamless connection between your mobile camera and the social network, really shouldn’t be unsettling, unless you’re the type of person that doesn’t trust Facebook with your private moments. Facebook stores your synced shots in a private album until you manually go in and pick the shots that you want to share with friends.

See. Totally not creepy. Well, save for the fact that whatever you shoot is stored on a Facebook server somewhere. I’d understand if that gave you pause. But then again if you have Photo Stream enabled on any of your iOS devices, you’re essentially trusting Apple with the same responsibility.

Skeptic that I am, I’ve chosen to enable Photo Sync for the simple reason that sometimes it would be nice to more easily share more of my photos on Facebook, especially the best ones that I forget to post while lost in a moment. I suspect that plenty of Facebook’s 1 billion users will feel the same, which means the social network will easily maintain its status as the most popular online destination for photo-sharing. Currently, Facebook members upload more than 300 million photos to the social newtork each day.

To enable Photo Sync, visit your Facebook Timeline from the Facebook for iPhone or Android app, click on photos, then select to enable Sync. The feature is gradually being rolled out to U.S. iOS app users and all Android app users who’ve previously uploaded at least one photo via web or mobile.

Photo credit: maaco/Flickr

Frustrated by the inability to repost something you love from Facebook’s mobile News Feed? Fret no more, as the social network today launched a mobile share button for its mobile website.

The new button is the mobile equivalent of the share button you already see on the website. It finally gives you a way to repost content from friends and Pages when you’re using Facebook’s mobile site.

The share button is also headed to the social network’s iOS and Android applications in the near future, a company spokesperson told VentureBeat.

The mobile share button sits adjacent to the “like” and “comment” buttons at the bottom of posts, as pictured right. Members can click “share” to repost the status update and add their own comments.

The button is an important one, not only because it satisfies the pleas of people who have asked for the long overdue feature, but because it makes a once complicated process effortless. As such, the additional share button should help brands, businesses, celebrities, and publications get their messages, sponsored or not, in front of even more people.

Facebook now has 604 million monthly active users on mobile, roughly 20 percent of whom only access the social network from their mobile devices. Once the bulk of these users gain access to the mobile share button, we can expect to see a dramatic increase in the number of shares for some posts. More shares will lead to more attention, fans, traffic, and possibly even sales.

[via TechCrunch]

Photo credit: Juan Camilo Bernal/Shutterstock.com

Two months into testing a program for promoting sponsored applications in Facebook’s iOS and Android applications, the social network has opened the service to all developers.

Now officially titled “mobile app install ads,” the units allow application makers to buy prominent exposure for their apps in the mobile News Feed.

The ads appear in the stream with a subtle “sponsored” label (as pictured right), and allow Facebook members to click through to Apple’s App Store or the Google Play marketplace to purchase or download a promoted app.

“With these new ads, mobile apps and games of all sizes across any category can reach the right audience, at scale,” Facebook engineer Vijaye Raji wrote in a blog post Wednesday. “TinyCo saw 50% higher CTRs and significantly higher conversion rates compared to their current mobile channels, as well as a significant increase in player engagement.”

Raji said other beta partners such as Kabam, Fab, Big Fish, and Nanigans also experienced higher engagement rates and better reach to more relevant users.

Now that the units are openly available, they will either allow the social network to address its mobile monetization issues or alienate members who’ve not yet noticed a stream of ads cluttering their mobile News Feeds. The task at hand is especially important now that nearly 20 percent of Facebook’s mobile users skip the website altogether. Facebook has 600 million monthly active mobile users.

Facebook today also promised developers substantial improvements to the ad units in the coming months. The ability for end users to install apps without leaving Facebook’s app, the option to customize the ad based on audience type, and the choice to show ads to people who have not installed an app were all cited as examples.

Facebook has been taking heat for eons over its mobile strategy, and this news is likely to send certain analysts through the roof: The social network’s first-ever interface for mobile ads, which launched October 3, was the work of a couple interns.

Granted, these interns aren’t the awkward 22-year-olds you have in your mind’s eye. The coding half of the pair is Peter Cottle, a verified braniac working towards a mechanical engineering PhD from Berkeley. (That’s him on the right in the picture above.) Previously, Cottle helped code autopilot software for General Atomics Aeronautical Systems, a nuclear physics and defense contractor headquartered in San Diego, Calif.

Facebook’s engineers, interns or otherwise, are undoubtedly some of the best minds in Silicon Valley, and the company prides itself on giving new recruits meaningful projects during their very first days on the job.

For Cottle, he got his project assignment within days of his internship beginning in May this year. At that time, the company had just launched Promoted Posts and Pages Manager for iOS, all while grappling with an explosion in mobile traffic from its users.

“These three separate events combined together to form the perfect opportunity,” Cottle wrote today on the company blog.

“For my internship project, I was tasked with implementing the Promoted Posts feature inside the Pages Manager for iOS application.” In other words, Facebook’s first-ever mobile advertising product.

During the project, Cottle met Leo Mancini, a young product design intern from New York. As Cottle labored over the code for the ads product, hacking through the night in BoltJS, Mancini had been tasked with designing Page insights for mobile.

“After bringing Leo up to speed on the current state of the app, he came back to me in a few weeks with an amazing interface that blew me away,” Cottle said. “With just one slider and a confirmation button, the new UI could create, pause, play, stop, and adjust campaigns for a promoted post. Even better, just above the campaign box is a carousel insights view where admins can see the direct impact of their campaigns.”

Here’s a look at the iOS ads app, which Facebook officially rolled out on October 3, 2012, just five months after Cottle’s internship began:

Mancini became a full-time Facebooker in September 2012. Cottle will return to Facebook as an employee in the spring of 2013.

Top image courtesy of Peter Cottle, featuring Cottle with Facebooker Dawn Choo

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Facebook’s mobile risk has turned into an opportunity for application developers. Today, the social network has unveiled a mobile ad unit designed specifically for application makers looking to promote their creations to the 543 million people who access Facebook on mobile each month.

Still currently in testing, the units are called “mobile ads for apps,” and they allow application makers to buy prominent exposure for their apps in the mobile News Feed.

The promoted applications appear alongside organically surfaced app recommendations in a suggested applications box. A click directs people to Google Play or the Apple App Store for download. The units run on a CPC model, so app developers can set a daily budget and bid for clicks through to Apple’s App Store or Google Play. App makers can also specify ad targeting preferences such as region, gender, and age.

Once the new unit is more widely released, it can help Facebook tackle its stock-crumbling problems; shares closed down Tuesday at $20.72. For starters, mobile ads for apps make Facebook far less constrained on the mobile ad front.

The company, which can pretty much only place ads in the mobile News Feed, now has a mobile ad unit that looks nothing like a Sponsored Story — or an ad, for that matter. In fact, the units, sandwiched next to suggested apps, are partially disguised as app recommendations, which means users might not process them like ads and may be more open to seeing them more frequently than Sponsored Stories.

Plus, Facebook is targeting a completely different buyer, which greatly expands the audience who might be interested in paying for exposure on the social network.

The net effect may be that Facebook can serve double or triple the number of ads it shows to each mobile user, and that’s a pretty big deal. In the theory, the social network could jump from making roughly $500,000 a day from mobile ads to making $1 million a day or more by the end of the third quarter. While the additional mobile revenue won’t be enough to magically return the company to a valuation of $100 billion or more, it should provide investors with some proof that Facebook can still make a buck or two from members that skip the web version.

Photo credit: Cienpies Design/Shutterstock

A LinkedIn breach that compromised 6.5 million passwords spiraled into a security frenzy this week when Last.fm and eHarmony also suffered from password hacking attacks. Facebook, so far in the clear, has today gone on the offensive with improved mobile security features.

Facebook added new security features, including account lock down and password reset via mobile, to protect the nearly 500,000 people that access the social network from mobile devices each day.

For Android owners, Facebook has made its extra, opt-in login step, called “Login Approvals,” a bit more convenient. Facebook users who turn on login approvals are required to enter a security code each time an unrecognized computer or device tries to access their accounts. Now, members on Android can more easily retrieve the codes through the Facebook mobile application, instead of needing to wait for an SMS.

A number of other features also allow users to reset their passwords, clean up any damage, and more quickly get back into suspended accounts from their mobile phones. You can even lock down your accounts from your devices should you expect a breach. This is designed to make Facebook’s social authentication tool for verifying user identity work just as smoothly on mobile as it does on the desktop.

Also new today is a way for those who use mobile browsers to surf Facebook to report News Feed content as spam or hide a story. This feature replicates what users can already do on their desktop and should help the social network and its users police and eradicate spam activity.

Thursday’s mobile improvements won’t keep mobile Facebook users completely protected, but they certainly provide a remote social networker more of the same protections and conveniences she has when in front of her computer.

Photo credit: Darwin Bell/Flickr

Facebook has just announced that sponsored stories, a subtle form of advertising, are coming directly into your News Feed in a whole new way.

Sponsored stories are a little different from straight-up advertisements, but they’re still commercial, bought-and-sold content that comes from brands to unwitting consumers. Previously, advertisers had to buy right-hand-column ad space for their sponsored stories; now, the News Feed is being sold separately as ad inventory on its own.

And it’s pretty valuable inventory, too. As daily Facebook users, we’ve trained our eyes to tune out the visual noise — ads, spam, etc. — in the right hand column. But sponsored stories, even though they’re from brands, won’t look and feel like a normal ad. You might not recognize it as an ad even after you’ve seen it.

Facebook defines these stories as “posts from your friends or Pages on Facebook that a business, organization or individual has paid to highlight.” This could be your buddy’s checkin at an In-N-Out Burger; it could be a Like for a brand’s Page. It might be something with a little more context. But the point is, the brand is paying to put this stuff in your feed, content that would otherwise probably not even be on you radar.

The latest evolution in Facebook marketing means that these sponsored stories won’t be in the right-hand column, where you would expect to see Facebook ads; rather, they’ll be front and center, right along with legit stories from your friends and family members.

And yes, this goes for the desktop site as well as the mobile site and apps.

The mobile ad creep has been expected for a while now — especially given the constant complaint from pundits that Facebook can’t monetize its mobile channels and the current risk that poses to the company’s stock price.

“Marketers will have the opportunity to buy sponsored stories in News Feed separately from other placements,” a Facebook rep wrote to VentureBeat in an email.

“As companies are promoting services more frequently on mobile, this option gives them the opportunity to focus on specific placements that will impact them most directly.”

Brands can choose to place their sponsored stories in the News Feed on desktop only, on mobile only, or on both.

These sponsored stories” won’t be as overt (or annoying) as most advertising. After all, they fall under the banner of marketing or even public relations more than they do advertising per se. As Facebook design guru (and Timeline chief) Sam Lessin told us in a recent conversation about brands on Facebook, “The key with [branded content on Facebook] is storytelling and expression.”

Lessin said that in order to be successful, Facebook needs to ensure a good experience for everyone — both the brands that pay for Facebook’s servers and the end users that make it worth their while to do so. “Brands don’t want to be overly promotional; in the long-term, they know it’s a turn-off to people… A lot of brands aren’t great storytellers, but the best ones are.”

Until today, the company didn’t have any way to make money from its mobile apps due to the lack of ads. Compounding the problem is the fact that consumers really don’t like it when ads take up valuable real estate on their tiny smartphone screens.

The company recognized this lack of revenue as a big enough problem that it listed its mobile platform as an investment risk in its S1 filing for an initial public offering.

Now Facebook has a strategy to turn brand content into ads that show up in your mobile news feed, thus tapping into a previously unused ad revenue stream. Facebook’s strategy is similar to Twitter, which announced yesterday that it would be inserting promoted tweets into the timeline on its iPhone and Android apps.

For Facebook, brands can now make popular news updates with high levels of engagement into “Sponsored Stories”(shown right) that show on Facebook’s website and mobile apps. Rather than hitting the viewer over the head with outright advertising, these stories have a similar status to updates from his or her friends and family members.

While the strategy is aimed at unlocking Facebook’s final ad revenue frontier, it is also a big shift in the way brands interact and advertise on Facebook. That means a lot is riding on how advertisers react to the new options.

Less ads, more engagement for businesses

To get some perspective, VentureBeat spoke with Victoria Ransom, chief executive at WildFire, a social media company that helps brands market themselves on Facebook.

“Facebook’s strategy really puts the pressure on brands to send out the right content,” said Ransom. “Facebook’s mobile platform has limited real estate and brands need to be careful to make sure their ads are entertaining.”

In short, companies will need to provide engaging, valuable content. If you got constantly bombarded with blatant ads whenever you checked Facebook on your phone, you’d un-like that company’s page pretty quickly. Ransom says that brands will have to focus on starting conversations and make use of the new Offers feature so that customers can engage with the brand and don’t ignore advertising efforts.

The timeliness of ads will also play a crucial role, and Ransom says that a six month-planned ad campaign may not be relevant enough for Facebook’s ever-changing news feed.

“Basically if you’re gong to start putting ad content in someone’s stream it needs to be interesting and timely, otherwise it won’t do well,” Ransom told VentureBeat. “Especially now, with Facebook’s new features, brands need to be nimble, they need to listen and understand their customers.”

Will companies like the changes?

In order to be successful, brands will likely need to shift much of their marketing strategy to get the most visibility with Facebook’s new strategy. But will they want to?

“For Facebook, there is a lot of anxiety over changes like this, but people ultimately get used to it, and find it substantially better,” Reggie Bradford, chief executive of social media dashboard Vitrue, told VentureBeat in an interview. “For example, when Facebook shifted between becoming a Fan of a company to Liking a company page, there were short term dips in engagement and then it skyrocketed. I expect a period of transition, but then marketers will see the increased value, especially with the direct messaging of brands and a more curated timeline.”

Bradford also pointed out that it is in a company’s best interest to embrace these changes, especially when it comes to mobile.

“If you’re a marketer and you’re not optimized for mobile, you’re missing 40 to 60 percent of your audience. Companies need to optimize the mobile experience as their primary screen,” he said.

As long as brands can see the value in following Facebook’s new strategies, Facebook will reap the benefits. It might not be enough to eliminate the mobile platform’s risk entirely, but it is the first step in generating revenue from platform that has been free of ads for a very long time.

Mobile phone on a table with Facebook app image via Flickr user Johan Larsson