Facebook’s mobile advertising revenue grew at a faster than expected pace in the third quarter. Advertising revenue rose 36% to $1.09 billion, up from 28 % growth during the second quarter. The total number of ads delivered by Facebook in the third quarter increased by 27% over last year and the average price per ad increased by 7%.
Mobile ads helped reignite Facebook’s overall advertising business during the third quarter. Mobile ad revenues came in at roughly $150 million, much higher than the estimated $45 million in the second quarter. 14% of the company’s advertising revenue came from mobile ads.
A key investor concern hanging over Facebook has been mobile advertising. Facebook has struggled to transition its business to mobile devices as its users increasingly access the social network with their smartphones. The news helped to reassure investors that the social network has begun to figure out how to profit off smartphone and tablet users.
Colin Sebastian, an analyst with Robert Baird & Co, said, “This certainly dispels the most bearish view, that Facebook couldn’t monetize people on phones or tablets. In about a six-month period they’ve actually started to generate decent revenues form their mobile applications.” Mark Zuckerberg, the chief executive who created Facebook, said, “Over the long run we’re going to see more monetization per time spent on mobile than on desktop.”
Facebook posted a net loss of $59 million, or $0.02 a share, in the third quarter. Excluding income tax adjustments and share-based compensation, the company earned $0.12 a share. Revenue from its payments and other businesses increased 13% to $176 million. Zuckerberg said he was not pleased with revenue from gaming.
Facebook had 1 billion monthly active users as of September 30, 2012. 604 million current members are mobile users. Instagram, the photo-sharing app that Facebook acquired this year, now has 100 million users, rising from 27 million when the company was bought.