Facebook's phone-first strategy is paying off -- to the tune of $2 billion

Facebook is no one-trick pony. Its blockbuster second quarter, when it pulled in $1.8 billion in revenue, has officially been eclipsed by the social network’s even more impressive $2 billion third quarter. Twitter? What Twitter?

Almost half of the $1.8 billion Facebook raked in from ads came from mobile. Maybe brands are swayed to buy mobile ads because the social network is doing an impressive job of getting its users to use Facebook on their smartphones. Mobile monthly active users jumped 45 percent year over year, to 874 million.

Overall, Facebook reported a more modest 18 percent increase in monthly active users, to nearly 1.2 billion. Facebook CEO Mark Zuckerberg said during the Wednesday earnings call that of the 507 million smartphone users who check Facebook once a day, the average person is engaging with more than one ad per week. Facebook, including Instagram, gets one in five of the minutes that you spend on your phone, which is more time than you spend on YouTube, Snapchat, LinkedIn, Pinterest, and Twitter combined. (Zuck was pretty proud of that fact.)

One sore subject for Facebook in the wave of positive numbers from the last quarter is teens. Facebook chief financial officer David Ebersman said teens' use of Facebook remains stable this year, but daily usage has declined slightly. It’s not the end of the world, but it is a sign that Facebook needs to do more to compete with teen-friendly apps like Snapchat and Tumblr if it wants to remain relevant.

Facebook will focus on improving Instagram and Messenger, its stand-alone apps, as part of that effort. Teens love photo-sharing and chatting apps, and Facebook has two major assets in its back pocket.

Keep an eye on News Feed

Facebook is carefully watching the rollout of ads on Instagram, specifically auto-playing video ads, to see how people respond. Are they mad about ads?

Mobile app install ads figure heavily in Facebook's money-making strategy.

“The experience with video on Instagram has been very positive so far,” Zuckerberg said during the call. “I think having a clip that autoplays can be a good experience in line in the Feed, and people feel they’re in control of the experience because they can scroll away from the content.”

The Instagram video ad launch, which is still slowly rolling out, is “an important launch for Facebook overall” because video could get you to click on News Feed ads. If videos do well on Instagram, they could do well on Facebook.

“If we do it poorly, it could be a negative thing,” Zuckerberg said.

But don’t expect those Instagram ads, which mostly resemble the average, pretty, filtered Instagram photo or video, to cross over to the News Feed.

“The News Feed ads, the size and the shape, they’re meant to be as exciting and engaging as the content,” Facebook COO Sheryl Sandberg said. “We want the ads to be as good as the user-shared content. We have a lot of room to grow. We’re going to match the format of the product we’re working with as we roll out ads.”

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