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Monday, December 17, 2012

Facebook and Google Benefit From Mobile Ad Surge

Making big money from advertisements on a small screen has been a challenge for many media companies, including Facebook and Google. But mobile ad spending grew significantly this past year, according to a new report.

A research report by eMarketer found that advertisers' spending on mobile ads grew much faster than previously estimated. This year, advertisers spent $4 billion on mobile ads in the United States, up from $1.45 billion last year. Investment firms and market researchers had thought this year's mobile ad spending would be closer to $2 billion, according to eMarketer.

The amount spent on mobile advertising is still a tiny fraction of the wider digital ad market. Over all, American advertisers spent $165.9 billion on advertising this year, including digital, print and broadcasting ads. But nonetheless, the healthy growth shows that the tech media giants have taken significant steps toward solving the mobile-advertising riddle.

A lot of the gro wth in mobile ad spending is fueled by Facebook, which introduced an advertising approach called “sponsored stories,” according to the eMarketer report. This tool allows businesses to post a Facebook status update and promote it so that certain users will see it on the company's mobile apps or its Web site; if those users click “Like,” their friends may see the promotion as well. This year, Facebook brought in $339 million in total mobile ad revenue.

“Pretty incredible considering they had zero mobile ad revenue last year,” said Clark Fredricksen, a vice president of communications at eMarketer.

Google, too, had a good year with money from mobile ads. The company is performing particularly well with revenue from searches on a mobile device - like when an Android or iPhone user does a Google search and then selects an ad. Google made $1.86 billion this year from mobile search ads, which accounts for 93.3 percent of ad spending in this category. That's a big increase from last year, when it made $623 million from mobile search ads, according to the report.