Facebook (NASDAQ:FB) was on a tear Wednesday afternoon. The company’s stock advanced as much as 3.8 percent in afternoon trading, buoyed by a number of minor positive catalysts.
It’s no small secret that advertising is the heart of Facebook’s revenue model. In the fourth quarter of 2012, 84 percent of the company’s total revenue came from advertising, a 41 percent year-over-year increase and the primary factor in the company’s overall growth. With this in mind, investors have kept a keen eye on any new tool or service that Facebook is working on that could drive this growth.
On Wednesday, investors got what they were waiting for. Reports indicate that the social network is rolling out a new tool that will allow advertisers to use third-party information to target ads at Facebook users. Advertisers will be able to combine Facebook’s vast swaths of user data with information from data brokers like Acxiom Corp. (NASDAQ:ACXM) and Alliance Data Systems Corp. (NYSE:ADS)…
This data includes browsing history, email subscriptions, and spending behavior both online and offline. By using this information in tandem with Facebook’s data, advertisers can place their ads more effectively. In turn, Facebook can charge more per ad, and continue to grow its top line.
Adding to Facebook’s good mojo on Wednesday are reports that General Motors (NYSE:GM) will once again be buying advertising on the social network. Investors in either company may remember that just a week before Facebook launched its IPO, GM decided to end its advertising relationship with the company. The news was a major disappointment at the time and negatively impacted sentiment in the stock’s first few weeks of trading. The loss cast doubt on the effectiveness of Facebook ads.
But with a battery of new tools in hand, the negativity seems to be water under the bridge. GM will advertise the Chevrolet Sonic — an entry-level subcompact targeted at younger buyers — through Facebook’s mobile site. Fueled by advertising partnerships like this, eMarketer expects Facebook to nearly double its U.S. mobile ad revenue between 2013 and 2015.