Facebook’s revenue in the second quarter of the year surged 59% from the same period a year ago thanks largely to ad revenue from the network’s mobile advertising.
The social network reported today that 84% of its Q2 advertising revenue stems from mobile ads, which appear on Facebook, Instagram and across Audience Network. Given that advertising makes up nearly 97% of the company’s revenue, the roughly $5.241 billion that retailers and other marketers spent on mobile advertising during the quarter made up about 81% of the company’s overall revenue. That’s a significant increase from Q2 2015, when mobile ads accounted for 72% of the company’s overall revenue.
“People have shifted to mobile and marketers know they need to catch up,” said Sheryl Sandberg, chief operating officer, during a conference call with analysts. “Mobile is no longer a nice to do, it’s a must do, and we’re working closely with marketers to help them make this transition.”
Facebook attributes its advertising success to ad targeting. During its conference call with analysts Sandberg pointed to Lighting Etc., a third-generation family-owned retailer that used Facebook and Instagram ads to drive in-store sales. The retailer targeted 25-45-year-old homeowners interested in interior design, who live within 35 miles of their Fort Worth, Texas showroom. That specific targeting enabled it to reach more than 300,000 consumers who were likely to be interested in its products. The retailer says its revenue is up 40% this year, which it attributes in part to its ads on Facebook and Instagram.
“We’re also improving the experience for our community by building our business with more engaging ads,” said Mark Zuckerberg, Facebook founder and CEO. “We’ve also emphasized the importance of measurements and value in driving real results for the businesses that use Facebook, and that means helping them create more relevant and engaging ads. Over the next five years, we’re working hard to build ecosystems around some of our newer products.”
Among those “engaging” ad types are dynamic ads, which let retailers and other advertisers serve shoppers ads based on the products they looked at on the merchant’s site or app. Sandberg said that retailers are getting “search-like ROI from dynamic ads.” She noted that more than 300 million consumers see dynamic ads each month and over 2.5 billion unique products have been uploaded by marketers.
Another key to Facebook’s success, said Zuckerberg, has been its ability to the changing ways consumers are interacting online. “Ten years ago, most of what we shared and consumed online was text,” he said. “Now it’s photos, and soon most of it will be video. We see a world that is video first with video at the heart of all of our apps and service.”
For the quarter ended June 30, Facebook reported:
- $6.436 billion in total revenue during the quarter, a 59.2% increase from $4.042 billion in the same quarter a year ago.
- $ 6.239 billion in advertising revenue, a 63.0% increase compared with $3.827 billion.
- Mobile advertising represented approximately 84% of ad revenue during the quarter, up from 73% a year ago. That would indicate mobile ad revenue was approximately $5.241 billion during the quarter, an 80.2% increase compared with $2.909 billion a year earlier.
- $3.71 in average advertising revenue per worldwide user, up 42.1% from $2.61 a year ago. Facebook calculates average revenue per user as its total revenue during a period, divided by the average number of monthly active users at the beginning and the end of the period; that is why the average revenue per user doesn’t equal revenue divided by its number of active users.
- $13.74 in average advertising revenue per user in the U.S. and Canada, up 59.2% from about $8.63 a year ago.
- Net income was $2.055 billion, up 185.8% from $719 million.
- 1.128 billion daily active users, an increase of 16.5% compared with 968 million last year.
- 1.712 billion monthly active users, up 14.9% from 1.490 billion.
- 1.033 billion mobile daily active users, an increase of 22.4% from 844 million.
- 1.574 billion mobile monthly active users, a 19.8% jump from 1.314 billion.
- More than 1 billion monthly active Messenger users.
- More than 1 billion monthly active WhatsApp users.
- More than 500 million monthly active Instagram users, including more than 300 million daily active users.
- Of those monthly active users, 967 million accessed Facebook only through mobile apps or mobile versions of its web site. That’s up 47.6% from 655 million a year ago.
For the first half of the year, Facebook reported:
- $11.818 billion in total revenue, a 55.8% increase from $7.586 billion in the same period a year ago.
- $11.404 billion in advertising revenue, a 59.6% increase compared with $7.144 billion.
- Net income was $3.565 billion, up 189.6% from $1.231 billion.