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Facebook leaps ahead in mobile advertising

– Facebook’s success in mobile advertising, which is making it a stronger rival to Google, is also providing a model for other social-networking sites such as Twitter, Pinterest and Snapchat.

Facebook’s mobile ads generated 41 percent of revenue last quarter, up from 14 percent a year earlier, helping the company top second-quarter profit and sales estimates last week.

The results contrasted with earnings from Google and Yahoo, which both reported lower-than-predicted revenue.

As companies cope with a shift to wireless devices, Facebook is benefiting from a user base that checks in several times a day and is willing to accept marketing messages in news feeds. Twitter is already seeing ads surge with a similar approach, and others such as Snapchat may not be far behind, said Laura O’Shaughnessy, chief executive officer of SocialCode.

“You will see mobile ad dollars booming as usage heads in that direction,” said O’Shaughnessy, whose company helps advertisers buy on social and mobile networks. “Facebook made huge changes to its news feed ads that made them much more effective, and that’s why there’s more spend there.”

While Google accounts for more than 50 percent of the world’s mobile-ad market, it’s now growing more slowly than Facebook. Internet-search ads – Google’s biggest strength – are less effective on mobile screens than on desktop computers, said Scott Kessler, an analyst at S&P Capital IQ in New York.

“It’s harder to read,” Kessler said. “People are less likely to click on it, and there’s lower pricing in a mobile environment.”

Rob Shilkin, a spokesman for Mountain View, Calif.-based Google, declined to comment.

Twitter, which lets users share 140-character status updates, also sells ads that appear inside mobile news feeds. Those ads account for more than half of the company’s revenue on some days, CEO Dick Costolo has said.

Pinterest, a site for collecting and sharing images, and Snapchat, a mobile messaging service, haven’t yet introduced mobile ads. Still, they’re now better poised to do so in the wake of Facebook’s success, O’Shaughnessy said.

Banner advertising, meanwhile, can be less relevant because it doesn’t typically target users based on their interests or habits, Kessler said. Google’s AdMob unit and Apple’s iAd service both focus on those kinds of promotions, which often appear at the top or bottom of a device’s screen.

Facebook’s mobile application has gained support from advertisers because it more closely ties ads to the activities of its 819 million users, said Michael Pachter, an analyst at Wedbush Securities Inc. in Los Angeles. Facebook, the world’s largest social-networking site, has 1.15 billion members in total – including people who just use it on desktop computers.

“The existence of a Facebook app on your phone makes you more likely to check on it day in and day out,” Pachter said. “Google is great in satisfying bar bets. I’m not sure if it’s as good in Internet ad revenue as Facebook.”

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