Despite a host of privacy concerns and other controversies, Facebook Inc.’s advertising revenue jumped 30.2%, thanks in part to Instagram and its strong mobile advertising business, the social network reported on Wednesday.
Mobile ads accounted for 93% of the social network’s ad revenue during the quarter, a four percentage point increase from 89% a year earlier. Based on that information, Internet Retailer calculates that Facebook’s mobile ad business grew 36.1% during the quarter to $15.475 billion from $11.373 billion a year earlier.
However, despite Facebook’s advertising growth, its user growth rate slowed during the quarter. The social network only added 49 million new monthly active users during the quarter.
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One area that is growing is Instagram Stories, which now has 500 million daily users, said Mark Zuckerberg, Facebook’s CEO, during a conference call with analysts. And the social network is increasingly focused on finding ways to drive. Stories enables users and brands to post photos and videos that disappear after 24 hours.
The social network is also increasingly focused on turning Instagram into an ecommerce platform, he said. For example, in November it announced plans to enable consumers to buy products featured in videos they see in their feed and save items to a specific “shopping collection” in their saved posts.
“On Instagram, one of the areas I’m most excited about this year is commerce and shopping,” he said. “There’s a lot of natural activity happening here. And this year, I expect us to deliver some qualitatively new experiences around that.”
Facebook’s strength as an advertising platform has helped paper over a slew of controversies that include it paying consumers to monitor their smartphone usage in what appears to be a violation of Apple Inc.’s policies, a major data breach that is likely to result in a record fine, as well as several stories examining Facebook’s controversial approach to crisis management. Sheryl Sandberg, the social network’s chief operating officer, noted that Facebook has 7 million active advertisers, including 2 million advertising on Stories.
“During the holidays, companies used our ads to help people discover deals and find gifts,” she said. “We saw particular strength among advertisers that optimized for measurable objectives, like conversions or sales.”
She pointed to Framebridge, an online framing startup that used Facebook’s automatic placement tool to run ads across Instagram Stories, as well as the Facebook and Instagram feeds. It ran short videos to highlight how frames can make great holiday gifts and its Instagram Stories ads helped it generate more than 25% of its new customer sales.
Those types of results have kept advertisers satisfied, says Aaron Goldman, chief marketing officer at digital marketing firm 4C Insights.
“Despite a challenging year, Facebook has continually increased value for brands through developments like the expansion of shoppable advertising in Instagram Stories and Explore as well as new platforms for improving ad targeting like Portal,” he says. “In 2019, video will become an even bigger focus with formats like Stories taking center stage across the Facebook Inc. portfolio, which includes Messenger and WhatsApp alongside Instagram and Facebook. We also expect growth with in-stream video as Facebook delivers more long-form, curated and original programming through Watch and IGTV. Overall, the Facebook family of apps is well-positioned to help marketers deepen their connections with engaged consumers.”
For the fourth quarter ended Dec. 31, Facebook reported:
- $16.640 billion in advertising revenue, a 30.2% increase from $12.779 billion.
- Mobile advertising represented approximately 93% of ad revenue during the quarter, up from 89% a year ago. That would indicate mobile ad revenue was approximately $15.475 billion during the quarter, a 36.1% increase compared with roughly $11.373 billion a year earlier.
- $7.25 in average advertising revenue per worldwide user, up 19.2% from $6.08 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.
- $34.09 in average advertising revenue per user in the U.S. and Canada, up 29.8% from about $26.26 a year ago.
- Net income was $6.882 billion, up 61.2% from $4.268 billion.
- 1.523 billion daily active users, an increase of 8.7% compared with 1.401 billion last year.
- 2.232 billion monthly active users, up 4.8% from 2.129 billion.