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4 takeaways from Facebook’s Q4 2017 results

Facebook’s total revenue grew 47 per cent over USD 40 billion in 2017 while fourth quarter total ad revenue was USD 12.8 billion, up 48 per cent. Mobile advertising accounted for approximately 89 per cent of advertising revenue for Q4 2017, up from approximately 84 per cent of advertising revenue in the Q4 2016.

Commenting on the earnings report, Mark Zuckerberg, CEO, Facebook said, “2017 was a strong year for Facebook, but it was also a hard one.”

Here are some of the key takeaways from the earnings report:

1) Video is here to stay
Facebook’s Q4 ad revenue grew 48 per cent year-over-year while mobile ad revenue was USD 11.4 billion, up 57 per cent from last year, and contributed approximately 89 per cent of total ad revenue in Q4. The full-year 2017 mobile ad revenue grew 56 per cent compared to 2016 and was broad-based across regions, marketer segments, and vertical.

Sheryl Sandberg, COO, Facebook said, “In 2017 mobile conversions continue to accelerate. Data from 17 markets shows mobile accounted for 69 per cent of online conversions on Black Friday and 64 per cent on Cyber Monday. It also shows 80 per cent of conversions on Singles’ Day. As we expand and improve our ad products advertisers are increasingly developing mobile first ads rather than simply taking their TV creative and putting them online.”

Mobile first video accounted for half of Facebook’s video ad revenue in Q4 from 41 per cent last quarter. “We’re seeing the short form videos work well and Instagram Stories were people can watch a full-screen vertical video and swipe up to quickly learn about a product or brand. 60 per cent of these ads are viewed with sound on,” Ms Sandberg added.

“Over the next three years, we know video will continue to grow. So our job is to build a video experiences that help people connect with family, friends and group. That’s why I’m excited about Watch as a place to connect with people who have similar interests and why we launch a product like Watch party, where friends can watch a show together,” Mr Zuckerberg explained.

2) Time spent on Facebook is down (But there is a reason!)
After a scrutiny-filled 2017 due to fake news and hate news, Facebook made a number of changes last year to make the platform more secure. This reflected the company’s earnings call as Zuckerberg explained that the platform has now changed it’s focus on prioritising ‘meaningful connections between people rather than passive consumption of content’. Mr Zuckerberg added, “In 2018, we’re focused on making sure Facebook isn’t just fun to use, but also good for people’s well-being and for society. We’re doing this by encouraging meaningful connections between people rather than passive consumption of content.”

Facebook hired around 14,000 people working across community ops, online ops, and their security efforts.

In the changes made in the last quarter of the year to address security issues, time spent on went down by approximately 50 million hours every day. But Mr Zuckerberg strongly outlined, “Let me be clear: helping people connect is more important than maximizing the time they spend on Facebook. As a result of this update, you will now see more content from friends, family and groups that lead you to interact with people, and less public content that leads to more overall time spent. By focusing on meaningful connections, our community and business will be stronger over the long term.”

For marketers, this might also mean that less people will see their content and advertisements on the platform as the News Feed changes its focus. Addressing these issues and talking about how this change might affect Facebook’s business, David Wehner, CFO, Facebook said, “the biggest impact of the focus on meaningful interactions will be in areas like passive video, where from a business perspective, we monetise less on a time spent basis. So if you think about it in terms of things like post views in News Feed, which drives impression growth that we think this will have less of an impact. We still believe we have an opportunity to grow impressions at a modest space year-over-year across the platform.”

3) Asia pushing user growth
Facebook now has over 1.4 billion people using the platform globally. This figure is up 14 per cent compared to last year, and Mr Wehner highlighted that the user growth is led by markets like India, Indonesia and Brazil. “Overall our global community is strong and growing,” Mr Wehner added.

4) Making ads more transparent
The earnings call also highlighted that Facebook has now started rolling out ‘a major ads transparency effort’. “We’ve already begun launching a way for anyone to view the ads a page is running on Facebook, Instagram, Messenger -even if they aren’t the intended audience. We’re testing in Canada first with the goal of rolling it out in the US this summer ahead of the midterm elections,” Mr Zuckerberg added.

Shubhi Tandon

Shubhi Tandon is the Assistant Editor at Digital Market Asia. Fascinated by the evolving digital media industry, she has focussed on tracking developments in the Asia Pacific market since 2014.
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