A 51.7% jump in Facebook’s quarterly revenue has been pinned to the social network’s ability to satisfy the growing need for quality video ad placements.
The network reeled in $5.84 billion during Q4 2015, up from $4.50 billion in the previous quarter and $3.85 billion in the same period last year.
Advertising sales at the network continue to scale new heights as experts go about choosing their key drivers for this growth. According to Justin Taylor, UK managing director at Teads, it’s all down to video.
“Facebook’s focus on video has clearly paid off,” Taylor commented. “We know video is leading the charge in terms of delivering premium, respectful ad formats and this is what is appealing to consumers.
“With a wealth of data driving its ad platform, it’s no wonder advertisers are still placing their faith and dollars in Facebook’s hands.”
Analysts have labelled Facebook’s level of growth as “phenomenal” considering some less positive results at tech companies like Apple and eBay, both of whom appear to have seen their international growth slow-up as a result of the dollar’s strong performance.
The hidden gem
Video is a strange area for Facebook and an even stranger one for the people trying to analyse its impact on the social network.
On one hand, its presence on the site and app is clearly growing, and the topic was a key point of focus on the company’s Q4 earnings call. On the other, no figures exist to outline how successful video is to Facebook in terms of driving revenue.
Still, the figures that are available almost speak for themselves. CEO Mark Zuckerberg says that 500 million people watch videos daily on Facebook, and testing has started on an area of the site where users are only served video content.
Zuckerberg added that the company’s “strategy is working” and that many more opportunities lie ahead for its various ad divisions.
On the move
Another key area for Facebook is mobile advertising, which has been the key focus of its earnings in recent years.
With Facebook’s net income doubling to $1.56 billion, things seem to be following the plan that Mark Zuckerberg and his team set out before mobile was the word on every marketer’s lips. In 2012, eMarketer reported that by branching into mobile ads, it had helped US mobile ad spend rise from $1.45 to $4.06 billion within the space of a year.
Fast forward to 2016 and global ad spend is being tipped to reach $100 billion worldwide, with 62% of this coming from the US and China.
This continued growth is playing very much into the hands of Facebook, whose mobile arm now drives 80% of its ad revenue – up 2% from Q3 2015. Stephanie Carr, VP EMEA at Marin Software, believes the site is one of few making the most of the opportunity at hand.
“The annual census reveals that across the board in the UK, online spending levels are not where they need to be. On average, 25% of all UK media consumption is via mobile devices, yet only 10% of all ad spend goes on mobile,” she commented.
“Facebook is not alone in realising the importance of mobile but it does appear to be using the device particularly effectively to reach its ever-increasing user base. Advertisers looking to enjoy similar success need to make sure that mobile is getting the share of budget it really deserves.”
In light of the findings, Facebook’s share price lifted 7% in extended trading.