Facebook reveals mobile ad revenue hike and ad-tech ambitions: Cake, Huge, We Are Social, Socialbakers and more discuss what its Q3 results mean

In its Q3 results Facebook revealed its user base now matches the size of China's population; that its mobile ad revenue equates to two thirds of its overall ad $2.96bn (£1.84bn) revenue and that it plans to increase its spend next year by 75 per cent.

The Drum caught up with industry experts from Cake, Huge, We Are Social, Socialbakers, and more to see what they thought of the results; the mass revenue from mobile; whether it has become a more compelling video ad platform, and what its future role could be in the ad-tech landscape.

Robin Grant, global managing director, We Are Social

Facebook has proven it's a company that can make money. Mobile was the star performer once again, accounting for $1.95bn, or 66 per cent, of the platform's revenue. This trend is unlikely to reverse any time soon, given the 29 per cent year-on-year growth in Facebook's mobile active users. This is how people now consume the platform, and Facebook will continue to improve its mobile offering.

Overall user growth slowed, but the 2.27 per cent increase is reasonable when you consider the platform’s already huge global user base. At the moment, Facebook is comfortably outperforming its social competitors financially, and is likely to be taking a larger share of marketing budgets as a whole. It’s a platform brands are serious about and willing to invest in.

Given its strength on mobile and its plans to invest in widening its reach with initiatives like internet.org, it's in a strong position to build even further on these results down the line.

Jan Rezab, founder and chief executive, Socialbakers

The fact that Facebook now makes two-thirds of its revenue on mobile shows it could play a leading role in advertising technology. The industry doesn't know what it is doing. That is a clear fact. Facebook can lead it and own it and solve it.

If they [Facebook] meet the $3bn analyst expectation, that's big. That’s a lot of growth to be honest. I’m anticipating the mobile percentage revenue will go up a little bit judging by their other regions with mobile. That’s my thinking. Of course Instagram is going to start playing a revenue role but not yet.

In Q4, there's typically an increase in the price in ads. When bidding goes up, there’s more ads for the system. The system is filled more, which in turn would mean (and does mean) that they're going to have more ad revenues in Q4.

We’re seeing app install prices get into much higher value, and I expect the highest dollar/prices in Nov and Dec (due to seasonality, as all the companies want this holiday traffic). You know initially, the app installs were mostly by gaming companies, but it’s shifting to e-commerce, software, non-gaming, even banks.

Renne Fehsenfeld, social media director, Cake

The continued growth of the 'original' social network will continue to give marketers and advertisers cause to keep it front of mind when considering new content-based campaigns.

Make no mistake; 1.35bn monthly users is an incredible number and one that is invaluable to marketers and advertisers alike, especially when it's in conjunction with the multiple ad formats that offer greater creative freedom, reater visibility and greater (sometimes spooky) targeting options.

The emphasis on video isn't new though and it represents what we always knew – moving content is more often than not, more compelling than static content. When it's done right, that is. Instagram knows that. Twitter knows that. Which is why they've all introduced similar video propositions. Given the propagation of various different social channels and the ever-evolving ad propositions from other competitors, if Facebook hadn't made these changes, then brands, marketers and agencies would have began to look elsewhere.

Do I see Facebook as a video advertising platform? No. In fact, if you see it as an advertising platform, then you're thinking about it the wrong way. It's a story-telling platform – whether they are stories from my friends, my families or brands that I like. Too often we see brands failing to respect that fact or invest accordingly.

Even though reach on Facebook is similar (sometimes bigger in size) than TV reach, brands are still favouring TV ad production in favour of investment in truly social content. The different ad propositions are just news ways to bring those stories to the surface and get them in front of the right people (although if it's good enough, they should have seen it already!)

Andy Pringle, head of performance media, Performics UK (part of ZenithOptimedia Group)

Facebook has an incredible, ever developing ad proposition. But, as a company that by its own admission moves fast, the latest positioning story can sometimes get lost.

In getting out of ‘Social Jail’ and moving away from ‘Like’ driving, the site has diversified to such an extent that it can now position itself as a one-stop shop for all campaign types be it DR, brand or social. As well as providing the different deliverables required for success including conversion, reach, engagement, data matching – all on a mobile-first platform that is now measurable to the nth degree.

The advent of Atlas, into 2015, and video is yet another string to that bow. It is the responsibility of the agency to ensure that each department and function is set up to utilise every element of the platform appropriately. For example, if the TV buyers are given a wider digital remit and have the authority to book stations digital incarnation as well as putting YouTube and Facebook on the plan, brands will reap the benefits.

Laura Jennings, head of strategy & client services, Headstream

Facebook’s ad proposition is definitely more compelling – just look at the new Atlas offering.

Facebook offers ad features that target audiences across the purchasing cycle, i.e. the ‘retargeting’ tool helps support the consideration stage of the journey and the ‘custom audiences’ tool supports in terms of retention and loyalty. And being able to build lookalike audiences is a really intelligent way of broadening a brand’s reach.

Facebook also rolled out autoview, making video more prominent in the news feed. The platform eats up video – and from our experience video achieves better engagement and reach compared to paid photo/text content.

The video proposition layers sophisticated targeting on top, which offers brands the opportunity to unlock the value of both the Facebook platform and their own customer data. We refer to this as a programmatic approach to paid social, as essentially you use customer data to more accurately target audiences and build the sophistication and efficiency of campaigns.”

Jon Myers, vice president and managing director EMEA, Marin Software

In Q3, the daily average number of Facebook users that logged in from a mobile device was 703 million. The explosive usage in mobile has fuelled advertisers to direct more spend in this direction, with obvious success. Our own Q3 data revealed mobile accounts for 63 per cent of ad clicks on Facebook.

However, this doesn’t mean advertisers should abandon larger-screened laptops and desktops altogether. Despite attracting less traffic than mobile devices, a huge 65 per cent of all social conversions still happen on a desktop computer. To make the most of this opportunity, advertisers need to make sure there is a balance in spend between mobile and desktop while the latter continues to outperform.

And Facebook’s success need not be seen as a threat to Google, since the companies serve very different purposes along a consumer’s path to conversion.

We know that while consumers often first interact with a brand message on Facebook, they are more likely to purchase a product via a search engine. Smart advertisers are combining what they’ve learned about a consumer in browsing mode on Facebook and applying this when the consumer moves into buying mode on a search engine.

This is a powerful combination which enables advertisers to deliver hyper-targeted search ads that drive more, and higher value conversions. In fact, our data shows that people who click on both a search and social ad contribute approximately twice as much revenue per click than those who only clicked on search ads.

Elisah Van Vriesland, social media account director, Manning Gottlieb OMD

Facebook is already a really strong contender in video advertising. In August, the network delivered nearly one billion more video views than YouTube.

Brand behaviour has changed from previously linking to YouTube content on Facebook pages, to posting videos direct/native to the platform.

This is the next logical step in promoting more engaging content on the network, where the ad format is synonymous with the format of a users’ personal video upload: utilising both the auto-play feature and newsfeed ad placements, thus not disrupting the user experience.

Creatively, there may be an issue with getting users to engage with a muted video, but with improved reporting on total views and completion rates, the value of this specific ad format will quickly be realised.

Patrick Salyer, chief executive, Gigya

Facebook’s latest earnings announcement shows the company has made solid gains in its lead as the dominant identity provider on the web. This is echoed in Gigya's own Q3 social login data which shows the platform has continued to grow globally, with particular success in North, Central and South America, with eight in 10 consumers in the latter territory now opting to log in via Facebook over other social login options. In Europe, Facebook has remained dominant with 62 per cent of consumers using it as their preferred login method.

In contrast to Facebook’s success, Yahoo’s popularity has taken a major tumble with use of Yahoo identity now in single digits for the first time in nearly three years.

The ​world’s largest social network’s updates to Facebook Login earlier this year seem to be making a positive impact on Facebook identity across the web, with users now able to select the data they share with sites and apps with line-by-line controls. With Twitter’s launch of ‘Digits’ and Apple’s ‘Apple Pay’ function announced just weeks apart from each other, it’s clear Facebook has competition in the race to own consumer identity.

The move from Apple is particularly interesting, potentially pitting the company against Facebook and Google as an identity provider in the future​. Combining Apple Pay with Passbook effectively digitises a user’s entire wallet, and with that their identity as a consumer. Apple is not alone in recognising the importance of payments in this equation as Facebook applied to the European Union earlier this year for a license for money transfer capabilities.

This is part of what is believed to be Facebook’s plan to incorporate payments into its messaging platforms. Facebook also owns WhatsApp, which has a huge international subscriber base – especially in the developing world. It will be very interesting to see how the company plans to develop its offering in this space and what bearing it has on earnings in the future.

Martin Harrison, planning director, Huge

Over the past year it has become an awful lot easier to understand what Facebook ads are for. Facebook has aggressively repositioned itself as a reach/broadcast platform and is leaving engagement (likes and shares) behind.

The move from engagement to reach works for advertisers - it has clear parallels with the broadcast model - and it works for users. Ads are the price of a free service, and now that brands have stopped desperately demanding engagement, they are much more like ads in other channels. This in turn makes the newsfeed, which is the only game on mobile, easier to advertise in and an easier place to be advertised at. And, at the moment, Facebook ads are cheap.

You're going to see at lot of case studies with big ROIs in the next few months. Finally, what they've learned is very applicable to Instagram and Whatsapp, so they should become viable as platforms much more quickly.

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