Facebook’s stock soared today on news that its mobile advertising efforts are paying off. The stock is up 22% over its price yesterday. As VentureBeat says:
After investors jumped on Facebook stock in after-hours trading yesterday, following the company’s mobile-focused earnings report, it’s not a huge surprise to see the stock make another huge leap this morning.
Facebook’s stock is up 22 percent from yesterday, trading at $23.80, as of the time of this post. The stock reached a high of $24 this morning, and it was up almost 28 percent in pre-market trading. Facebook’s stock is still well below the $38 it opened at, but the rise is still a good sign for investors.
What does Mitt Romney have to do with this rise in Facebook’s stock?
- Facebook’s soaring stock price is the result of mobile advertising traction the company is now seeing.
As of last month, Mitt Romney’s campaign was the biggest Facebook mobile advertiser worldwide. Says Romney “digital director” Zac Moffatt:
“We’ve done an aggressive amount of advertising,” Moffatt said. “We were the first with mobile advertising on Facebook, and I think we’re one of the largest advertisers in the world now with Facebook Mobile.”
Romney’s campaign reports an extraordinarily-high click-through rate of 10% on its Facebook mobile ads (emphasis mine):
In the last 60 days, the Romney campaign has become the biggest user of Facebook’s experimental mobile advertising platforms and report click-through rates of about 10 percent, an engagement rate far higher than normal Web based ads, Moffatt said.
- Most web advertisers would be thrilled with results in the 1% range. Most results are in the 0.2% to 0.3% range these days. How is it that Romney’s ads are 100 times more effective than the average? Some web experts say the Romney campaign’s astronomically high rate is almost certainly the result of fraud.
- Every time Romney’s ads register a click (whether real or through fraud), Facebook gets paid.
Let’s break it down: the biggest Facebook mobile advertiser registers an impossibly-high clickthrough rate, which boosts Facebook’s advertising profits, which boosts Facebook’s stock.