Facebook Inc. is winning more friends on Madison Avenue.
The social-media giant's better-than-expected second-quarter results, driven in part by a big increase in mobile advertising revenue, signaled that after a rough start, the company has made marketers feel more comfortable with spending money on the social network.
"The service has improved and the company is a more attentive to advertisers now," said Adam Shlachter, senior vice president of media for DigitasLBI, a digital ad agency owned by Publicis Groupe SA. "A year or two ago, the company was a little difficult to work with because they were growing so fast and there was inconsistencies with its service."
Facebook didn't have much presence in mobile advertising a year ago, a concern that contributed to the stock-price slide after its initial public offering price. Then, in the latest quarter, mobile accounted for 41% of Facebook's ad sales?and investor attitudes have recovered with Facebook's ad revenue: the shares skyrocketed 30% Thursday.
"Everything worked this quarter," said Brian Wieser, an analyst with Pivotal Research Group.
In part, Facebook is benefiting simply because it is one of the few online outlets with a big enough audience for the rapidly expanding group of marketers wanting to put money into mobile.
Facebook shares jumped nearly 20% in after-hours trading as Facebook surprised investors with big gains in revenue, earnings and active users for the second quarter on Wednesday. (Photo: Getty Images)
Mobile ad spending in the U.S. is expected to jump 75% this year to $7.7 billion, according to eMarketer, out of total U.S. online ad spending of $41.9 billion.
"There is not an advertiser on the planet that doesn't want to have a mobile strategy," said Rob Norman, chief digital officer of GroupM, a unit of WPP PLC. And Facebook has one of "the largest mobile advertising platforms that offers scale."
American consumers spent 225.4 billion minutes on Facebook's mobile app and mobile Web pages in the second quarter, about double the year ago period, according to comScore. Americans spent about 18.4 billion minutes on Twitter's mobile app and Web pages, by comparison.
What advertisers particularly like about Facebook mobile is the ability to advertise on the news feed?the spot on member's pages where they post their own news and read what their friends are posting. The ads, with colorful photos, are hard to miss, right in the middle of the scroll of updates.
"They have been restless about finding better ways to reach and engage the Facebook audience especially on mobile," said Tony Pace, chief marketing for the Subway sandwich chain, which advertises on Facebook.
Over the past year, Facebook has put some of its top engineers to work on ad problems and encouraged engineers?a group usually confined to Facebook's offices?to spend more time with marketers and visit the headquarters of big clients to better understand their objectives and how they approach advertising.
More broadly, Facebook is trying to demonstrate its effectiveness as an advertising platform. For example, Facebook now works with Datalogix, which identifies people who have been exposed to an ad on Facebook and then mines credit-card and retailer purchase data to determine whether those people bought the product.
Facebook's "focus on measurement" has helped advertisers get the data they need to prove placing ads on the site helps their business, said Vik Kathuria, managing partner at MediaCom, an ad-buying firm owned by WPP.
To be sure, advertisers have some concerns, particularly about the potential for ad overload.
REUTERSFacebook is winning more friends on Madison Avenue.
This fall, Facebook plans to offer video advertising to run in the news feed, according to people familiar with the matter. Ad buyers and advertisers are worried that the ads could turn consumers off. People familiar with Facebook's plan said that the company is going to limit the number of video ads that consumers will see daily.
Facebook "must balance the users experience with making money," said Sean Corcoran, directors of digital media at Mullen, an ad agency owned by Interpublic Group of Cos.
During Wednesday's call with analyst, Facebook Chief Executive Mark Zuckerberg said the company closely watches people's sentiment around ads.
"We haven't measured a meaningful drop in satisfaction when we ask people about their experience with Facebook," Mr. Zuckerberg said. "We're comparing that to the result we get when we ask the same question to people using a version of Facebook with no feed ads at all."
The company said that on average ads make up about 5% or 1 in 20 stories in the news feed.
Write to Suzanne Vranica at suzanne.vranica@wsj.com and Evelyn Rusli at evelyn.rusli@wsj.com
A version of this article appeared July 26, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Marketers Warm to Facebook's Mobile Ads.
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