Facebook announced its fiscal 2014 second quarter earnings today, July 23, 2014. As expected, earnings were good and indeed even exceded the expectations of Wall Street which had (on a consensus basis) foreseen revenues of $2.8 billion for the quarter, while Facebook delivered $2.9 billion. With this performance, the company found a way to get likes on facebook (that would be their facebook fan page) as the stock price jumped on the news. Indeed, earnings for the quarter jumped from analysts estimates of 32 cents a share to 42 cents a share (this equated to a net profit for the quarter of $791 million – good, but contrast this to Apple’s earnings for the same period of $7.7 billion). The stock price, showing its pleasure at the news, closed at $74 during the trading period known as “after hours trading”.

The real news here is that Facebook, overcoming a hurdle that scared investors at the time of the company’s initial public offering, showed strong ad performance in the mobile sector.

This is important to investors as it is a generally held belief that it is harder to monetize mobile ads while at the same time users are migrating towards high levels of mobile use. Facebook stated that total active users tallied 1.32 billion (representing a 40 million total user growth, which would likely be below what both Facebook and Wall Street analysts would like to see, but this less than positive information was over-ridden by the positive mobile ad news). Of these users, over 1 billion used a mobile device during any given month of usage. This is a dramatic increase compared to a number of years ago and clearly represents the future in terms of interacting with the site (and thus how Facebook is going to get its advertising revenues).

The importance of the success of mobile ads can not be underestimated for Facebook. Not only are the users of its service going mobile, so many if its acquistions are strongly mobile centric (for example, Instagram, which is solely designed for mobile use) that to rationalize the high prices paid for these web properties ($19 billion for WhatApp) Facebook needs to show investors that it has the ability to makes ads work on mobile.

There are skeptics to this apparent success, however. Facebook is a great social platform for advertisers as there is a vast reach and yet a very definable (thanks to everything that Facebook knows about its users) market for them to go after and to cater their advertising to. So no matter what medium Facebook users utilize to access and interact with the social network, that is where advertisers will go. At least for now, say those whole still are cautious. Ultimately, efficacy of an advertising program is what brings consistent and growing business. Mobile effectiveness of Facebook ads has yet to endure sufficient time for testing of how ads are really being received and retained by users when encountered when mobile. There is plenty of anecdotal evidence that teens and early twenty adults are so used to seeing ads in their social interactions that they have trained themselves to ignore them completely – no matter how distracting. This is potentially problematic for companies like Facebook that rely on ads as their business model. Remember the most attractive demographic is the younger set teens to the twenties. This is because it is during that age that individuals tend to set their brand preferences that often stay for a lifetime. If they aren’t paying attention to the ads, the message will go unheeded and the brand loyalty will never develop.