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Mobile advertising rise fuels Facebook profit

First-quarter profits climb 58 percent to $217m, as 751m users access US social network giant from their mobile devices.

Last Modified: 02 May 2013 11:06
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Zuckerberg intends to push out Facebook's Home software, which puts the servive centre-stage on phones [Reuters]

Facebook's profits climbed 58 percent in the first quarter from a year ago to $217m, amid a surge in mobile advertising revenue.

The social network reported that its monthly active users rose 23 percent from a year ago to 1.11 billion, as 751m users accessed Facebook on mobile devices.

Mark Zuckerberg, the chief executive and co-founder of Facebook, said that mobile advertisements during the first three months of the year accounted for 30 percent of advertising revenue for the quarter.

The profit was just below market forecasts, but revenues were better than expected, rising 38 percent from a year ago to $1.46bn.

"We have seen strong growth and engagement across our community and launched several exciting products," Zuckerberg said.

During the first three months of the year the company launched new advertising products and Facebook Home software, which puts the social network centre-stage on Android-powered smartphones.

Facebook's share of the overall US online advertising market was expected to rise to 6.5 percent this year from 5.9 percent in 2012, according to industry tracker eMarketer.

The overall US digital advertising market has grown 14.8 percent to $9.64bn in the first quarter of this year, eMarketer reported.

It said that spending on advertising on mobile devices such as smartphones and tablets in the US was expected to rise by more than $3bn to $7.29bn this year, with Facebook's share growing to 13.2 percent.

Forrester analyst Nate Elliott said that Facebook had proven that it could target advertisements to smartphones and tablets, but it had not tapped into the great financial potential of using Facebook data to help other websites target advertisements for a fee.

Lukewarm response

A key question for Facebook looking ahead is whether its Home software will catch on after initially getting a lukewarm response.

The software weaves the social network into the home screens of phones powered by the latest versions of Android to focus on "people and not apps".

Google's online Play shop indicated that Home had been downloaded fewer than 15,000 times since its US release on April 12 until Wednesday and its overall rating was two stars on a five-star scale.

A version should be available in Europe in the coming months.

"Over the next few months we hope to push this out much more broadly and get it in the hands of a lot more people," Zuckerberg said of Home.

Facebook executives laid out a plan that included improving the quality and targeting of advertisements shown to members connecting from smartphones or tablets.

The strategy includes using Facebook as a platform for the discovery and distribution of third-party apps like those on the virtual shelves of Apple's App Store or Google Play.

Facebook's positive results detracted attention from a week of controversy after it initially refused to intervene over outrage at people sharing beheading videos.

The social network refused to delete the videos because it said they did not violate its policy as they were being shared to condemn decapitations.

However, it said on Thursday that it would delete the videos as it re-evaluated its content policy.

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