Facebook Gains on Promise of New Advertising Platforms

Facebook Inc. (FB) rose to the highest price in more than a month on optimism that new advertising platforms may help the world’s largest social network boost revenue.

Shares of Menlo Park, California-based Facebook rose 6.2 percent to $22 at the close in New York, for the highest closing price since July 30. Facebook has lost 42 percent since selling shares at $38 apiece in a May initial public offering as investors questioned whether the company could make money from users who increasingly access the site via mobile phones.

Chief Executive Officer Mark Zuckerberg may have helped allay concerns about the company’s ability to profit from its more than 955 million users with remarks earlier this week about efforts to expand mobile advertising, according to Aaron Kessler, an analyst at Raymond James & Associates. Reports this week touting the effectiveness of the new Facebook Exchange ad platform also bolstered confidence in the company’s mobile strategy, Kessler said.

“It could be a combination of all of that,” boosting Facebook’s stock today, Kessler said in an interview.

Facebook Exchange, a real-time bidding platform for advertisers unveiled in June, is among ’’promising’’ new options for placing ads, Kessler said in a research report today.

Facebook is doing a better job than Google Inc. (GOOG) in getting Web surfers to click on advertising based on browsing history, according to some partners using Facebook Exchange.

Facebook Exchange

Facebook Exchange, or FBX, generates as much as four times the return on ad dollars than other real-time bidding systems, said Triggit Inc., which makes software tools to help Facebook deliver the ads. Another partner, AdRoll, said advertisers used to getting $10 for every $1 they spend are making $16 for every dollar spent on FBX.

An increasing portion of display advertising sales is driven by this real-time bidding. Of the $18.9 billion projected to be spent on online display ads in the U.S. in 2015, about $5.08 billion, or 27 percent, will come from real-time bidding, according to researcher IDC. This year, real-time bidding will represent about 16 percent of the $12.6 billion U.S. market for display ads, IDC said.

Ashley Zandy, a spokeswoman for Facebook, declined to comment.

To contact the reporters on this story: Ryan Faughnder in New York at rfaughnder@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.