October 23, 2012, 4:21 PM

Facebook is a billion dollar baby

Its ad revenue has topped $1 billion for the first time.

Zak Stambor

Managing Editor

Lead Photo

Facebook Inc. reported today that it generated $1.086 billion in advertising revenue in the third quarter of 2012, marking the first time the social network’s ad revenue topped $1 billion. That total was a 36% jump from approximately $798 million during the same period in 2011 and a 9.9% increase from $992 million in the second quarter of 2012.

Facebook says that 14% of that advertising revenue stemmed from mobile ads. Facebook launched its mobile ad format, Sponsored Stories, in the first quarter. It has since added multiple mobile ad units that appear in consumers’ news feeds, which display updates from friends and from companies consumers are fans of. Reaching consumers in their news feeds is essential, says Facebook, because that is where they spend 40% of their time on the social network.

Overall, Facebook reported $1.23 billion in revenue during the quarter, a 28.9% increase from $954 million in 2011. The social network earned $377 million during the quarter, compared to $414 million a year earlier.

The social network generated average revenue of $1.29 per worldwide user in the third quarter, up 4% from $1.24 a year ago. In the United States and Canada the average revenue per user was $3.40 per user, up 21.4%  from $2.80 a year ago. Facebook calculates average revenue per user as its total revenue during a given period, divided by the average of the number of monthly active users at the beginning as well as the end of the period; that is why the average revenue per user doesn’t equal $1.23 billion (the Q3 revenue) divided by its 1.01 billion active users.

The social network launched several advertising tools during the quarter, including Facebook Exchange, its real-time bidding system that enables ad brokers, using cookies on consumers’ computers, to target ads to consumers based on their off-Facebook browsing. It also began offering its deals and promotions product, called Offers, to any global business with more than 400 Facebook fans. Roughly 100,000 pages have created Offers since its launch, says Facebook, and about 30% of Offer claims come from mobile devices.

Facebook says that it topped 1 billion active users in the third quarter. As of Sept. 30 its active user base was 1.01 billion consumers, a 26% jump compared with a year ago. It also reported having 584 million daily active users in September on its web site and app, up 28% compared to the same period in 2011. And it had 604 million mobile active users, a 61% increase from the same period a year earlier.

Those mobile users are increasingly important to the social network, says Mark Zuckerberg, Facebook founder and CEO. "People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform. At the same time, we are deeply integrating monetization into our product teams in order to build a stronger, more valuable company.”

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