Only a few weeks after Facebook Inc. CEO Mark Zuckerberg testified to Congress over concerns about its data privacy practices, the social network on Wednesday reported strong results, including a 50.1% jump in advertising revenue in the first quarter.
“For most of our existence, we’ve focused on all the good that connecting people can bring,” Zuckerberg said during a conference call with analysts. “But it’s clear now we didn’t do enough to prevent these tools from being used for harm as well, whether that’s foreign interference in elections, fake news, hate speech, or app developers and data privacy. So now, we’re going through every part of our relationship with people and making sure we’re taking a broad enough view of our responsibility, not just to build tools, but to make sure those tools are used for good. This means continuing to invest heavily in safety, security and privacy.”
Sheryl Sandberg, the social network’s chief operating officer, emphasized that “advertising and protecting people’s information are not at odds.” Facebook, she said, does both. “Targeted ads that respect people’s privacy are better ads. They show people things that they’re more likely to be interested in. We regularly hear from people who use Facebook that they prefer to see ads that are relevant to them and their lives. Effective advertising is also critical to helping businesses grow. This is especially important for small businesses who wouldn’t otherwise be able to afford to buy broad reach media.”
Despite those challenges, Facebook continued to grow in the first quarter, adding 67 million new monthly active users during the quarter.
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The strength of Facebook’s advertising business stemmed from mobile advertising, which accounted for 91% of the social network’s ad revenue during the quarter, a six percentage point increase from 85% a year earlier. Based on that information, Internet Retailer calculates that Facebook’s mobile ad business grew 60.7% during the quarter to $10.733 billion from $6.678 billion a year earlier.
Facebook’s mobile ads have become an increasingly important part of marketers broader advertising strategies, Sandberg said, noting that more than 90% of the advertisers who bought national TV Super Bowl ads also advertise on Facebook. “This shows that the largest advertisers understand the value of broad-based campaigns with us,” she said.
She cited Tourism Australia as an example of how marketers are integrating Facebook into their broader campaigns. To drive consumers’ interest in visiting Australia, Tourism Australia ran ads on Facebook and Instagram in the week leading up to the Super Bowl. On Super Bowl Sunday, it ran short video ads on Facebook before its TV spot ran at halftime. This drove 22% incremental reach on top of TV and a 35 percentage point lift in awareness. During the campaign, 50% of leads on the Tourism Australia site came from Facebook, she said.
Facebook also continues to roll out new ad units. For instance, in the first quarter Facebook made carousel ads available in Instagram Stories to enable advertisers to share up to three images or videos per ad instead of one.
For the first quarter ended March 31, Facebook reported:
- $11.966 billion in total revenue during the quarter, a 49.0% increase from $8.032 billion in the same quarter a year ago.
- $11.795 billion in advertising revenue, a 50.1% increase from $7.857 billion.
- Mobile advertising represented approximately 91% of ad revenue during the quarter, up from 85% a year ago. That would indicate mobile ad revenue was approximately $10.733 billion during the quarter, a 60.7% increase compared with roughly $6.678 billion a year earlier.
- $5.45 in average advertising revenue per worldwide user, up 31.6% from $4.14 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.
- $23.14 in average advertising revenue per user in the U.S. and Canada, up 39.7% from about $16.56 a year ago.
- Net income was $4.988 billion, up 62.8% from $3.064 billion.
- 1.449 billion daily active users, an increase of 12.9% compared with 1.284 billion last year.
- 2.196 billion monthly active users, up 13.4% from 1.936 billion.