Facebook Rises on Report of Mobile-Advertising Gains

Facebook Inc. (FB), owner of a social network used by more than 1 billion people, rose more than 2 percent after a research report said the company is showing signs of success in a push to make money from mobile users.

The company is “further along in monetizing mobile advertising” than is generally believed, according to Martin Pyykkonen, an analyst at Wedge Partners Corp. The stock advanced to $19.88 at the close in New York. Facebook has fallen 48 percent since its May 17 initial public offering.

“We know mobile advertising is still early, but we also think mobile advertising is near a positive inflection,” Pyykkonen wrote. “Advertisers have to find effective ways to advertise on mobile platforms because of the mass audience shift to mobile that is under way.”

Facebook has come under pressure from investors to demonstrate that it can wring sales from advertisers seeking to reach people who socialize on mobile devices. Ads on smartphones and other handheld electronics tend to be less lucrative than those delivered to a desktop audience.

The company said earlier this year that ad growth wasn’t keeping pace with user expansion. Third-quarter sales probably rose 29 percent to $1.23 billion, according to the average of analyst estimates compiled by Bloomberg. That’s less than the 32 percent increase in the second period, a slowdown from earlier quarters.

Facebook is scheduled to announce third-quarter results on Oct. 23.

Ad Tools

As part of its drive to boost mobile-ad sales, Facebook said today that it’s expanding a tool that helps developers advertise their wares. The ads, designed to drive downloads of software applications on mobile devices, were first rolled out to a limited number of partners in August. They’re now available to all developers, the company said on a blog today.

Facebook’s first mobile ad services weren’t introduced until March. The company has since unveiled other ad tools for handheld devices.

While showing more optimism for Facebook’s ad efforts, Pyykkonen said the company could face more competition from Twitter Inc., the microblogging service that has focused increasingly on mobile advertising.

“Twitter will present increasing large-scale competition to Facebook for advertising spending,” he said.

Questions about mobile have been a drag on the stock, which has closed above its initial public offering price only once since it began trading in May.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net;

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

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