Facebook seemed to answer at least one burning question about its mobile business on Thursday -- it doesn't plan to build its own smartphone -- but it's still not entirely clear how it will capitalize on its rapidly expanding base of mobile users.
"Building out a whole phone wouldn't really make much sense for us to do," said CEO Mark Zuckerberg on Thursday, when asked about Facebook's mobile strategy during a conference call to discuss its first financial report as a public company.
The number of people who access Facebook's service from mobile devices is expanding rapidly. The company had 955 million monthly active users at the end of June, of which 543 million accessed Facebook from a mobile device, the company said Thursday. That was up 67% from the same quarter last year, it said.
But Facebook continues to face a problem it laid out in its pre-IPO filings: It makes less money when users access its service from a mobile device than from the desktop. That fact contributed to the poor performance of Facebook's initial public offering.
On Thursday, Facebook said that its user base grew more quickly last quarter than the number of ads it serves, as users spend more time on its service using a mobile device. That reflects the fact that Facebook displays fewer ads to mobile users.
But Facebook pointed to early indications that the ads it introduced to mobile users in June will boost its mobile revenue. Its early analytics suggest that Sponsored Stories on mobile devices are performing relatively well, Facebook said. By the end of June, Sponsored Stories were generating around $1 million per day, it said, with about half on mobile devices.
Sponsored Stories appear in the user's news feed. If one or more of a user's friends has "liked" a particular brand, the user sees an item about that action in his news feed. The ads receive more prominent positioning in the news feed than other content, advertisers and analysts said.
Third-party studies have also indicated that the mobile ads have been successful. A report released on Tuesday by AdParlor, a firm that runs Facebook marketing campaigns, said Sponsored Stories actually perform better on mobile than they do on the desktop.
Users were 11 times more likely to click on a Sponsored Story on their mobile device than one on their desktop, the study found. However, those who clicked were 20% less likely to "like" the promoted brand. Mobile sponsored stories are still a buyer's market, with advertisers paying less per click than on desktop, according to the study.
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