Facebook’s mobile ad revenue grew by more than 60% last year

Mobile continues to drive Facebook’s ad revenue, to the point where it will no longer be separately reporting mobile and desktop results, executives revealed while discussing the company’s most recent quarter.

For the third quarter in a row, mobile advertising represented 84 per cent of total ad revenue, CFO David Wehner said during a Feb. 1 conference call, with the company’s fourth-quarter mobile ad revenue for 2016, $7.2 billion USD, representing a 61 per cent rise over the same quarter in 2015.

Part of that growth, Wehrer said, could be attributed to the platform’s sheer number of users: on average, 1.15 billion people accessed Facebook every day in December, an increase of 212 million, or 23 per cent, over 2015.

“Given that the vast majority of monthly and daily usage now occurs on mobile devices… we do not plan to include mobile and mobile-only usage breakdowns in our supplemental investor materials after this quarter,” Wehrer said.

Still courting businesses while shifting focus to video

Elsewhere, making friends with businesses continues to pay off for the company, with Facebook COO Sheryl Sandberg revealing that 65 million businesses are now using the company’s free Pages product, while 5 million are taking advantage of Instagram business profiles.

Mobile plays an important role in these efforts, she said, serving as one of three key marketing-related priorities for the company, along with courting additional marketers and making ads more relevant to consumers.

“In 2016, we saw more marketers prioritizing mobile and especially mobile video,” she said. “As consumer video has grown in News Feed, it’s given us that opportunity for video ads… and we’re seeing a lot of great examples of people using ads in the feed across Instagram and news feed.”

For example, Sandberg mentioned the company’s increased investment in dynamic ads, which allow marketers to automatically promote items from their company’s catalog based on such factors as a user’s browser history and location: highlighting products available at nearby retailers, for example, or showcasing travel deals for locations they’ve shown an interest in.

She also shared a couple of case studies, including Motorola, Inc., whose video ad (below) for the Moto Z phone was optimized for the short attention spans of Facebook and Instagram mobile users, targeted Android users and Verizon subscribers, and resulted in an estimated 3.5 per cent sales boost; and Illinois gardening centre Distinctive Gardens, which used one of Facebook’s online tutorials to shoot a holiday-themed mobile video that resulted in the business selling out of its holiday inventory.

“People consume video differently on mobile, so the best marketers are optimizing their creative,” Sandberg said, noting that advertisers can now reach more than 1 billion people per month on the company’s Audience Network.

She also acknowledged last year’s debacle in which it was discovered that a series of errors were causing four products, including instant articles, video, and page insights, to occasionally display incorrect (read: over-inflated) metrics.

“With only a small fraction of the businesses on Facebook and Instagram advertising, we know we have a lot of opportunity and hard work ahead,” Sandberg said. “In 2017, we’ll stay focused on helping businesses of all sizes reach customers around the world and grow.”

CEO Mark Zuckerberg also reiterated the company’s commitment to video, noting that Facebook would start by focusing on short-term content but that it eventually planned to create an ad-driven business model that would support longer-form content.

“There’s… a whole class of premium content that the creators need to get paid a good amount in order to support,” said Zuckerberg, who also mentioned the company was developing a video search feature.

“The biggest change that I think that we’re going to see on the consumption in News Feed and in the tab over the next year or two is going to be much more video inventory and content coming in as we work through and make that business model start to really click for a lot of folks,” he said.

Our thanks to investment research platform Seeking Alpha for the transcriptions from Facebook’s Feb. 1 Q4 earnings call.

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Jim Love, Chief Content Officer, IT World Canada

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Eric Emin Wood
Eric Emin Wood
Former editor of ITBusiness.ca turned consultant with public relations firm Porter Novelli. When not writing for the tech industry enjoys photography, movies, travelling, the Oxford comma, and will talk your ear off about animation if you give him an opening.

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