Facebook Inc.’s ad revenue in the first quarter jumped 51.1% from the same period a year ago thanks in large part to the social network’s rapidly growing mobile advertising business that accounted for 85% of its overall ad revenue.
Those strong results reflect Facebook’s continued ability to attract new users. The social network added 76 million new users during the quarter. That strong growth is providing a boost to Facebook’s bottom line given that the social network generated $16.56 in average advertising revenue per user in the U.S. and Canada—and $4.14 in average advertising revenue worldwide.
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Facebook’s advertising business continues to grow thanks to the social network’s steady push to develop ad formats tailored to specific verticals, such as retail. For instance, in September it rolled out dynamic ads for retail that show consumers the products available at nearby locations in real time.
“Our goal is to build meaningful connections between businesses and people,” said Sheryl Sandberg, Facebook’s chief operating officer. “We’re doing this by focusing on three key priorities: helping businesses leverage the power of mobile; developing innovative ad products; and making our ads more relevant and effective.”
The dynamic ads format, which let retailers and other advertisers serve shoppers ads based on the products they looked at on the merchant’s site or app, has proven particularly powerful, Sandberg said.
Pointing to Wayfair LLC, No. 24 in the Internet Retailer 2017 Top 500 Analysis Report, she noted that by using the ad format the home furnishings retailer has found higher revenue customers at a lower cost, beating Wayfair’s return on ad spend goal by more than 20%.
She also highlighted its new Collection ad format that let marketers “tell stories on mobile” by combining videos or photos of product images. When a consumer taps a product image tap, the ad opens up an “immersive” direct-response shopping tool.
Using the Collection ad format, Adidas America Inc., No. 66, featured four items from its product catalog below a video. The ad delivered a 5.3 times return on ad spend and a 1.8 times decrease in cost per conversion, Sandberg said. “It’s still early for this new format, but it’s a great example of how we can deliver innovative mobile experiences that work for advertisers and work for people.”
Facebook-owned Instagram is also seeing strong growth, particularly in its Snapchat-like Stories feature, which let users and brands post photos and videos that disappear after 24 hours. And Facebook’s Messenger app now has 1.2 million users, Facebook CEO Mark Zuckerberg said.
For the first quarter ended March 31, Facebook reported:
- $8.032 billion in total revenue during the quarter, a 49.2% increase from $5.382 billion in the same quarter a year ago.
- $7.857 billion in advertising revenue, a 51.1% increase from $5.201 billion.
- Mobile advertising represented approximately 85% of ad revenue during the quarter, up from 82% a year ago. That would indicate mobile ad revenue was approximately $6.678 billion during the quarter, a 56.6% increase compared with roughly $4.265 billion a year earlier.
- $4.14 in average advertising revenue per worldwide user, up 29.0% from $3.21 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.
- $16.56 in average advertising revenue per user in the U.S. and Canada, up 39.6% from about $11.86 a year ago.
- Net income was $3.064 billion, up 76.3% from $1.738 million.
- 1.284 billion daily active users, an increase of 17.8% compared with 1.090 million last year.
- 1.936 billion monthly active users, up 17.0% from 1.654 billion.
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