A year ago, Facebook’s leadership warned of a slowdown in ad spend in 2017, but fast-forward 12 months and those concerns would appear to be overplayed, as the social network today (November 1) posted revenues of $10.1bn for the third quarter – an annual increase of 49%.
The period represents Facebook’s first-ever quarter with revenues in excess of $10bn, with other notable milestones including its total numbers of advertisers now in excess of 6 million, with the vast majority classified as the long-tail of advertisers, defined as small advertisers or SMEs.
Facebook’s daily active user (DAU) count hit 1.37 billion representing 66% of its monthly active users (MAU) which numbered 2.07 billion as of September 30 (both statistics up 16% from 12 months earlier).
Average price per ad increased 35% driven primarily by increases in Feed ads, as well as Instragram ads, with Facebook also reporting that the total number of advertisers on its image sharing network now numbers 2 million.
In particular, the increased popularity of mobile video ads has helped buoy its revenue gains – its average revenue per user (ARPU) is now $5.07 (see image).
Facebook’s leadership were also keen to point out to financial analysts how its advertising revenue increase slowed for the fifth quarter in a row, a trend its expects to continue in the foreseeable future.
This was likewise accompanied by a 5% decrease in revenues “from payments and other fees”, which totaled $186m for the period, with the company reporting that over 550 million people use its marketplace feature.
Facebook chief executive officer, Mark Zuckerberg pointed out how he hoped the introduction of hardware such as its Oculus headset for $199 would further bolster its fortunes next year, when addressing financial analysts on the company’s earnings call.
“So much more will be possible in a world where everyone has internet access, where AI improves all our services, and where we can teleport anywhere and be with anyone, any time we want,” he said, vowing Facebook’s significant investment in these fields.
Mobile accounts for 88% of ad revenues
Mobile ad revenue for the period was $8.9bn, an increase of 57% year-over-year, accounting for 88% of total ad revenue, with Sheryl Sandberg, Facebook’s chief operating officer, adding that the company saw growth across all regions, marketer verticals, and segments during the period.
“In Q3, we gave advertisers the ability to run ads in video alone, and we’re seeing good early results, with more than 70% of ad breaks, and 50% of Facebook Audience Network viewed-to-completion, most with the sound on,” she said.
Sandberg also underlined Facebook’s efforts to ensure ads on its platform were better targeted, especially for the all-important SME sector where every ad dollar counts, she added.
Ongoing brand safety commitment
On the call to analysts, she also underlined Facebook’s brand safety commitment to larger advertisers – efforts she discussed at length with The Drum during Dmexco earlier this year – as well its its drive to ensure that all forms of content on the social network are “legitimate and authentic.”
Meanwhile, David Wehner, Facebook, chief financial officer, said the platform’s advertisers were still predominantly performance-based marketers.
“You do see people that are bidding on impressions if they are looking for a brand campaign, or a reach campaign, but those aren’t necessarily a part of the business that’s driving up [ad] prices,” he added.
Earlier in the year, it was the issue of third-party verified measurement (or lack thereof) that sparked uncomfortable headlines for Facebook, along with issues surrounding fake news, and brand safety.
However, speaking previously with The Drum, Sandberg pointed out how the company now counts dozens of companies among its measurement partners (DoubleVerify and Meetrics are two of the new names), on top of its planned Media Rating Council (MRC) accreditation.
“We’re really working on measurement, and that’s something we have a lot of work to do on, and the industry has been focused on proxy metrics such as how long people watch video, or how affiliated are they with a brand, and those are important – and we know we have to improve there,” she added.
Sandberg later went on to recount how Facebook is looking helping advertisers better assess how their ad spend on the platform is impacting sales, hinting that attribution, and showing an ROI will be key to it keeping marketers happy.