Facebook Inc.’s ad revenue in the third quarter jumped 48.8% from the same period a year ago, a slight acceleration from 46.9% growth in the second quarter.
That growth reflects the social network’s ability to consistently attract new users (it grew its monthly active user 15.9% during the quarter) and to drive more ad dollars from those users (its average advertising revenue per worldwide user rose 27.8% during the quarter and 37.2% among its lucrative U.S. and Canadian users).
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“We’re continuing to build our business by focusing on our same three priorities: helping businesses leverage the power of mobile; developing new ad products; and making our ads more relevant and effective,” said Sheryl Sandberg, Facebook’s chief operating officer, during a conference call with analysts. Facebook has 6 million advertisers, she noted, and Instagram has 2 million.
Many of those advertisers are small and midsized businesses, including retailers, Sandberg said, pointing to LoveBook, a retailer that sells personalized books. During a recent campaign, the retailer used Facebook ads to reach consumers getting ready to celebrate their first anniversary. The campaign produced strong results, she said, noting, “they’ve grown so much from marketing on Facebook that they’ve been able to hire 10 new employees this year alone.”
One key area where brands are seeing success, she said, is video. “Video is exploding, and mobile video advertising is a big opportunity,” Sandberg said.
Facebook expects video to continue growing in importance, said Mark Zuckerberg, Facebook’s founder and
CEO. “As video grows, it’s important to remember that Facebook is about bringing people closer together and enabling meaningful social interaction,” he said. “It’s not primarily about consuming content passively. Research shows that interacting with friends and family on social media tends to be more meaningful and can be good for our well-being, and that’s time well spent. But when we just passively consume content, that may be less true. When done well, video brings us closer together.”
Beyond video, Facebook has also been aggressively rolling out new marketing opportunities that retailers can leverage. For instance, the social network in September rolled out an ad format called lifestyle templates, that aims to help retailers transform their print catalogs into mobile ads.
“West Elm, a home décor company, recently used this template to promote its furniture and home accessories,” Sandberg said. “[West Elm] targeted people who already got their physical catalog and saw a 5.5% lift in purchases in store.”
The social network’s strong ad revenue growth suggests advertiser demand and the platform’s return on investment is “sufficient enough to offset the diminishing ad load contributions management has referenced in prior calls,” wrote Colin Sebastian, an analyst at Robert W. Baird, in a research note.
For the third quarter ended June 30, Facebook reported:
- $10.328 billion in total revenue during the quarter, a 47.3% increase from $7.011 billion in the same quarter a year ago.
- $10.142 billion in advertising revenue, a 48.8% increase from $6.816 billion.
- Mobile advertising represented approximately 88% of ad revenue during the quarter, up from 84% a year ago. That would indicate mobile ad revenue was approximately $8.925 billion during the quarter, a 55.9% increase compared with roughly $5.725 billion a year earlier.
- $4.97 in average advertising revenue per worldwide user, up 27.8% from $3.89 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.
- $20.69 in average advertising revenue per user in the U.S. and Canada, up 37.2% from about $15.08 a year ago.
- Net income was $4.707 billion, up 79.2% from $2.627 billion.
- 1.368 billion daily active users, an increase of 16.0% compared with 1.179 billion last year.
- 2.072 billion monthly active users, up 15.9% from 1.788 billion.
For the first nine months of the year, Facebook reported:
- $27.681 billion in total revenue, a 47.0% increase from $18.829 billion in the same period a year ago.
- $27.163 billion in advertising revenue, a 48.8% increase compared with $18.256 billion.
- Net income was $11.665 billion, up 75.5% from $6.648 billion.