Nothing To See Here — Just Another 50% Growth Quarter for Facebook

February 6, 2017

Digital Marketing Link Walls By Link Walls

If, like most people, you spend a good bit of time on Facebook, you likely noticed that Thursday was “Friends Day” — according to Facebook. News feeds were filled with nostalgic “Happy Friends Day” posts delivered via an animated robot/humanoid. It was also likely one more reason for celebration at 1 Hacker Way, as Facebook, Inc. reported another very solid quarter of growth (and February 4th was Facebook’s 13th birthday!).  

Some of the highlights from the quarter were:

  • Revenue increased 51%, and advertising revenue grew 53%. Total revenue was $8.8 billion. This quarter marked the fifth quarter in a row that Facebook’s growth rate exceeded 50%.
  • Mobile advertising revenue represented 84% of total revenue.
  • Monthly active users increased 17% with Facebook now counting close to 1.9 billion people as monthly active users.
  • Investments in capital expenditures reached $4.5 billion for the year, marking an increase of 78%. They also announced the expansion of four data centers and have started construction on four new ones.
  • Despite growing headcount and the cap-x investments for the year, Facebook generated $11.6 billion in free cash flow.

A few notes for brand and retail advertisers:

On the earnings call, Sheryl Sandberg, Facebook’s chief operating officer, talked about the rollout of Dynamic Ads for Broad Audiences. This represents a pretty significant expansion of its existing Dynamic Ads offerings. Those ads work by retargeting users on Facebook or Instagram with specific products they viewed on a retailer’s website. Dynamic Ads for Broad Audiences goes beyond this and allows an advertiser to target based on a user’s intent.

Intent-based marketing plays into one of Facebook’s biggest strengths: data. Facebook’s ability to gather massive amounts of consumer data and leverage it to effectively target shoppers is a major competitive advantage. Traditional search marketing has always had the ability to target users based on intent (the user’s query) with effective results. It will be interesting to see how Facebook’s program compares.

Ad load was a big topic back in Q3, and it was addressed again this week. Facebook, Inc. indicated that it expected slower growth on Facebook but that Instagram has more room to grow, based on the current level of advertising. Average cost for advertising increased 3% last quarter, and we continue to believe that prices will rise since ad capacity is limited and demand is still strong among advertisers (refer to your Economics 101 textbook for questions).

As the trends have shown, video continues to be a focus, and we can’t seem to get enough of cute videos of puppies. While everyone from Amazon to Apple is aggressively pursuing original content, Facebook has indicated that it’s taking a different path and plans to source video from the Facebook community and its partners.

Blog post by Link Walls, VP of product management at ChannelAdvisor