Facebook’s big push on advertising in the last quarter is paying off for the company, judging by the growth in revenues. The company says that in Q3, it made $1.09 billion in advertising, a 36% increase from the same quarter last year and also a sequential increase compared to Q2′s $992 million in ad sales. It’s also becoming an increasingly important part of the revenue mix: it is now 86% of total revenues, compared to 84% last quarter.
“The goal of our advertising business is to get users to interact,” said COO Sheryl Sandberg.
While Facebook is looking to push new areas of revenue, such as Gifts and payments, in reality advertising continues to grow as the most dominant revenue generator for the company. Before its IPO in May, Facebook said that ads accounted for 82% of its revenue.
Part of the reason why advertising continues to grow is that Facebook has gone hell for leather in introducing ever more formats for promoting people, places and things on its platform.
Among the new ad units introduced this quarter were Custom Audiences, Facebook Exchange, Offers (Facebook’s turn on discounted deals a la Groupon) — and, of course, mobile ads. These ads, appearing in users’ newsfeeds as Sponsored posts and more recently in the form of App recommendations, were introduced network-wide this quarter. They now account for 14% of the mix — or $152.6 million in mobile ad revenues in Q3.
The ad agency TBG yesterday put out a report on Facebook and advertising, where mobile was a central theme in terms of activity and what was growing the most. That report also noted that advertising investment activity was varying by region: the U.S. and Canada were showing to be much more receptive to buying into new social units, while European advertisers continued to favor non-social units such as the ads in the right-hand column, which usually take users off the site.
It will be worth watching whether Facebook makes any comments about how international companies’ media buys are comparing with those in the U.S. In any case, Facebook notes that the effect of foreign currency exchange has weighed down on its revenue, and advertising, growth. |Excluding the impact of year-over-year changes in foreign exchange rates,” Facebook says, “advertising revenue would have increased by 43%.”
Here’s how the ad revenue breakdown looks over the last several quarters: