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Mark Zuckerberg Facebook Instagram

Key takeaways from Facebook’s latest results and implications for marketers

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By Ronan Shields, Digital Editor

July 30, 2015 | 5 min read

Facebook unveiled its latest financial results yesterday (29 July) with record quarterly revenues topping $4bn, and mobile now accounting for over 76 per cent of revenues. During its earnings call, it also hinted at what marketers can expect from the social network including potential new ad products for Instagram, Messenger and WhatsApp, plus changes to how these units are bought.

In Q2 Facebook’s average price per ad increased 220 per cent, while total ad impressions declined 55 per cent, this was primarily due to the redesign of its ad format offering, with the redesign of its right-hand column ads, with the shift to mobile also contributing to this trend. As a result, revenue from ads served on personal computers was down approximately 8 per cent year on year.

However, a key area of focus for financial analysts was the social network’s vastly inflated operating costs, with the company’s stock price falling in the immediate aftermath of the earnings release.

But it was during the subsequent earnings call, that its plans for what to offer brands and advertisers were described in more detail. The Drum cherry-picks some highlights.

More Instagram ads

Instagram

Expect to see more Instagram ad units, a little under a year after sponsored Instagram posts were made available to advertisers in order to attract the 300 million users of the social networking service.

Talking about plans to further develop the Instagram proposition, Facebook chief operating officer Sheryl Sandberg, told those listening into the call: “Instagram ads will be available to more advertisers with new formats and better targeting, and the ability to buy online, as well as through third-party providers.”

She added: “With Instagram, we’re also looking at building out more capabilities, which means more formats like DR, and more ways to buy like self-serve… that said, we’re going to be really thoughtful and strategic about how we ramp revenue.”

David Wehner, chief financial officer, also went on to articulate some of the new ad products that the company was experimenting with, describing how the primary driver of video growth will be autoplay ad units in the Newsfeed, and that it was experimenting with others, such as “suggested videos”.

No WhatsApp or Messenger ad units any time soon

WhatsApp

WhatsApp’s founders were notably anti-advertising prior to its purchase by Facebook last year, which led to much speculation over how the social networking giant would monetise its user base of 800 million users, as well as the 700 million people using its Messenger app.

Answering questions from investors, Facebook chief executive Mark Zuckerberg said: “The playbook we’re going to run with Messenger and WhatsApp is kind of similar to how we thought about building a business in Facebook and Newsfeed.”

Making comparison to the pressures he faced to “just put standard banner ads” in the Newsfeed of the regular Facebook site, he told listeners that ads would perform better if there was an “organic interaction between people using the product and businesses.”

He added: “Messaging is similar… we’re working on a lot of things where people can get value from interacting with businesses, we launched some of them at F8, and we have a number of other things we’re working on across Messenger and WhatsApp… We’d ask for some patience on this to do this correctly.”

Keep an eye on Facebook’s search offering

Zuckerberg also addressed its nascent search capabilities, noting how Facebook is continuing to build on these, with 1.5bn searches performed on the network each day. It has also indexed 1.2tn posts, which posed “a huge opportunity to create value ahead,” according to Zuckerberg.

The social network additionally reported that year-over-year, it expected its ad revenue growth rate will slow down in both the third and fourth quarter – arguably another reason for its share price dip – indicating that the launch of significantly new ad units are unlikely to come by the end of the year.

What wasn't mentioned...

However, as we move into 2016, it’s clear where the social network will focus its efforts, this is not to mention the much-feted demand-side platform (DSP) that Facebook is quietly working on to further rival the Google offering, as was revealed by The Drum.

Mark Zuckerberg Facebook Instagram

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