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Digital Transformation Facebook Social Media

Facebook ad revenue climbs and Stories show signs of life after a scandal-plagued 2018

By Andrew Blustein | Reporter

January 31, 2019 | 5 min read

While Facebook seemingly suffered from PR crisis after PR crisis last year, the social giant posted major financial gains in the fourth quarter of 2018.

Facebook ad revenue jumped 30% in Q4

Facebook ad revenue jumped 30% in Q4

Facebook's total ad revenue last quarter totalled $16.6b, a 30% year-over-year uptick. Asia-Pacific led the way in terms of regional ad revenue growth at 34%, followed by North America and Europe.

Last quarter the company announced it was planning to invest in its Stories feature across Facebook, Instagram and Messenger. On today's quarterly earnings call, Facebook founder and chief executive officer Mark Zuckerberg said the growth of the business overall is mostly based on the growth of its Stories, and the company's goal is to monetize it to the same level of its news feed.

Though slowly, advertisers are beginning to embrace Stories

Facebook's chief operating officer Sheryl Sandberg said that two million advertisers are using Stories to reach customers and that Facebook has been using its Automatic Placements tool to covert feed ads into a format that fits Stories.

She added that artificial intelligence will help the site build out its ad capabilities.

"As we build new ad products, we remain focused on improving the overall quality of our ads. Across all of our platforms and formats, we’re investing in AI to make ads more relevant and effective. In Q4, we developed new AI ranking models to help people see ads they’re more likely to be interested in.

"We’re also using AI to identify and more quickly review ads that might violate our policies, which was particularly important during the US midterm elections. Looking ahead, we see more opportunities to use AI to keep people safe on Facebook and help businesses grow," said Sandberg.

David Wehner, Facebook's chief financial officer, did stress that first-quarter revenue will "decelerate by a mid-single digit percentage " compared to last quarter's numbers given the "attractive" prices of ads on Stories and the "headwinds" 2019 over industry-wide privacy concerns.

Scandals versus growth

Facebook's most recent concern came to light just a day ago (29 January).

The company was paying people aged 13 to 35 to install its Facebook Research app that let it gain access to user's phone and web activity, sidestepping Apple and Android data policies, a story first reported by TechCrunch. Apple and Google have since removed the app from their stores.

A Facebook responded to the report: “Key facts about this market research program are being ignored. Despite early reports, there was nothing 'secret' about this; it was literally called the Facebook Research App.

"It wasn't 'spying' as all of the people who signed up to participate went through a clear onboarding process asking for their permission and were paid to participate. Finally, less than 5% of the people who chose to participate in this market research program were teens. All of them with signed parental consent forms.”

Facebook is also being sued over Cambridge Analytica, is facing backlash over banning plug-ins that allowed transparency groups to track political ads, and saw a bug leak the photos of millions of users. But that isn't stopping people from using the platform.

Daily active users on the site reached 1.52b, up 9% compared to last year and led by growth in India, Indonesia and the Philippines.

The Facebook Family

Across the company's family of apps – Facebook, Instagram, WhatsApp and Messenger – around 2.7b people used at least one of the services in December, and on average 2b people used at least one app daily.

Zuckerberg addressed Facebook's reported intention to merge Messenger, Instagram and WhatsApp chat features, saying it's a user-first initiative that emphasizes privacy through data encryption and will likely remain in planning stages until 2020.

He did say that WhatsApp payments will expand into more countries. Sandberg noted that ads are "more of a future thing" for WhatsApp stories, as the company remains focused on consumer experience there.

Zuckerberg added that the company will continue to commoditize Instagram, saying he's looking forward this year to opportunities in shopping and commerce on the platform. Instagram also recently passed 500m daily active users on Stories.

Digital Transformation Facebook Social Media

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