Facebook's 2018 ad revenue surges 38% to $55B amid Stories ad growth
- Facebook's net income jumped 61% to a record $6.88 billion last quarter as revenue rose 30% to $16.9 billion amid continued user growth and strong demand for ad placements in Stories. Mobile ad revenue grew to 93% of total ad sales in Q4 2018 from 89% a year earlier, per an announcement.
- For the full year, Facebook's ad revenue increased 38% to $55 billion from 2017. Facebook CEO Mark Zuckerberg said in a conference call with analysts that 500 million viewers look at Instagram Stories every day.
- Facebook COO Sheryl Sandberg said the company has more than 7 million advertisers among its family of services, including Facebook, Instagram, WhatsApp and Messenger. Two million advertisers use the Stories format among those apps. Facebook's user base grew 9% to 2.32 billion, and more than 2.7 billion people use one of its apps each month.
Facebook's blowout results indicate that audiences and advertisers remain undaunted by the company's repeated data-privacy scandals. While advertisers publicly expressed frustrations about Facebook last year, it appears that reports about advertisers brushing off concerns about the company's bad behavior were true. That attitude is mirrored in its user base, which grew 9% despite some calls to boycott or delete the service.
It also appears that Facebook's focus on Stories, which the company opened to all advertisers in September, has paid off, with the format gaining popularity with users and marketers. That is especially true on mobile, which now generates almost all of Facebook's total ad revenue. Looking ahead, Facebook forecast that revenue growth will slow this year, and Stories ads will be a key driver of sales. The expansion of Stories ads to Messenger means that advertisers can now use the format on Facebook, Instagram and Messenger. "Stories on Facebook is growing quickly," CEO Zuckerberg said. "We're going to get where we need to get there." Facebook’s share of the U.S. digital ad market is forecast to be 20.8% by 2020, behind Google’s 35.1%, per research firm eMarketer.
Despite the favorable earnings, daily usage of Facebook apps has slowed in its markets that make up 70% of its revenue. The United States and Canada added about 1 million users, while Europe grew by about 4 million. Facebook boosted average revenue per user (ARPU) by $8.10 in the U.S. and Canada, and by $2.12 in Europe. Sandberg said the company can boost ARPU with more efficient targeting of ads.
Facebook in Q4 expanded its “automatic placements” technology to convert Newsfeed ads into a format that works for Stories and delivers ads for best results, Sandberg said. Facebook will seek to make the price of Stories more comparable with ads on the Newsfeed, CFO David Wehner said in the company's conference call with analysts. Already, advertisers are seeing less of a price difference between more expensive Newsfeed ads and Stories. Stories ad adoption on Instagram and Facebook is growing, and the pricing is similar between Newsfeed and Stories ads, Aaron Goldman, CMO of marketing tech firm 4C Insights, told Ad Age. It remains to be seen how Facebook's planned unification of Instagram, WhatsApp and Messenger will affect advertisers.
For now, it appears that Facebook's continued scandals and negative press attention have done little to halt its digital dominance. The earnings report comes on the same day that Apple revoked Facebook's permission to operate a research app that targeted teens and young adults in a study of their mobile usage habits and then blocked Facebook from running iOS apps internally. Facebook paid participants $20 a month to download an app that collected their personal data, TechCrunch reported, but the app circumvented Apple’s App Store by letting users download it in a way that violated policies. Facebook's Sandberg in an interview with CNBC defended the company’s study, saying only 5% of participants were teens and they provided signed parental consent forms. The revelation reopened a quarrel between Apple and Facebook over data privacy.
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