Facebook crushes Q1 estimates thanks to boom in mobile, video ads

Dive Brief:

  • Facebook posted a solid Q1 earnings report on Wednesday with a 52% year-over-year revenue increase to $5.38 billion, which well-surpassed Wall Street estimates, and sent the stock up 9% in extended trade.
  • The social network also revealed that it has now reached the 1.65 billion monthly active user benchmark, up from 1.59 billion in the last quarter.
  • Thanks to its recent push into live video and the continued popularity of its mobile app, advertising revenue shot up 57%, to $5.2 billion, over the same period last year. Mobile advertising represented about 82% of overall ad revenue for the first quarter, up from 73% a year ago.

Dive Insight:

As advertisers shift their budgets from traditional media to digital and increasingly mobile, Facebook has reaped the rewards. Even in the face of mounting competition from the likes of Snapchat, YouTube and even Twitter, the Menlo Park, Calif.-based company has been able to lure advertisers with its mobile and video offerings (not to mention its vast data and targeting abilities).

Facebook has taken a mobile-first approach to how it works for some time, and marketers should take heed of Facebook’s current clear focus on video of various types, particularly mobile and live video.

« We are in the beginning of a golden age of online video, » Facebook CEO Mark Zuckerberg said in a statement. And that focus has been proven out by an emphasis on Facebook Live, its live streaming video feature, and the news that it is currently developing a standalone camera app. The app is said to also serve as a platform to record and live stream video for Facebook Live.

Facebook COO Sheryl Sandberg said its users are watching three times the video as they did a year ago. In overall time spent on Facebook properties, Zuckerberg said users are spending more than 50 minutes a day on Facebook, Instagram and Messenger.

Just last week, Bloomberg reported that Credit Suisse Group AG predicts Instagram will contribute $3.2 billion in revenue to Facebook this year, tripling the price Facebook paid for the social media platform in 2012. Though Facebook hasn’t started advertising on WhatsApp and Messenger, analysts say they see that as a potentially lucrative prospect for the social media giant.

« They haven’t yet turned on the monetization spigot for Messenger or WhatsApp, so there should be significant headroom still, » Jan Dawson, chief analyst at Jackdaw Research, told Reuters.

Given its success on mobile, marketers and investors alike are watching to see what new apps, ad units and innovations Facebook develops. Tapping into its growing user base, particularly via its core mobile apps and through live stream video is clearly a strong bet. 

Recommended Reading

Reuters:
Facebook revenue smashes expectations as mobile ad sales surge

TechCrunch:
Facebook swells to 1.65B users and beats Q1 estimates with $5.38B revenue

Bloomberg:
Credit Suisse Says Instagram Is Going to Have a Huge Year

Marketing Dive:
Facebook is building a standalone camera app: WSJ

Marketing Dive:
Facebook Live Video to get priority in news feed




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