Facebook advertising model stays resolute – Mobile World Live

Facebook advertising model stays resolute

31 OCT 2019

Facebook brushed off ongoing controversies to deliver a stellar Q3 performance, with a sharp rise in revenue fuelled by its lucrative advertising business as well as a significant uptick in user numbers.

The company has faced ongoing pressure on a number of fronts recently, notably government probes around its handling of user data, questions over “fake news” published on its feeds, as well as its policy to run political ads which are under fire for their credibility and integrity.

Political ads in particular are in the spotlight after its rival Twitter announced it would no longer run them on its platform.

Facebook CEO Mark Zuckerberg will however not be following Twitter’s lead, as he defended the ads in an earnings call, stating that the company did not want to stifle political speech by issuing a ban.

Growth continues
If looking solely at the company’s financial performance, Zuckerberg could argue that the company needs to change very little.

And despite the issues surrounding the company, advertisers do not appear turned off. The company reported a 29 per cent rise in revenue in Q3, which hit $17.7 billion, driven by an advertising revenue increase of 28 per cent, accounting for $17.4 billion of the total figure.

Net income hit $6.1 billion, up 19 per cent from $5.1 billion last year.

Mobile advertising revenue represented the bulk of ad revenue, 94 per cent in total, up 2 per cent for the same metric in Q3 last year.

Daily active users were also on the up, standing at 1.62 billion on average for the month of September, a 9 per cent year on year increase.

There was an 8 per cent increase in monthly active users, which were recorded at 2.45 billion.

Notably, it was a particularly strong period in the US and Canada, with monthly users jumping by 3 million to 247 million in the two markets, following long periods of stagnation.

In total, Facebook estimated that 2.2 billion people use Facebook, Instagram, WhatsApp or Messenger every day on average, and at least 2.8 billion use one of the services each month.

Costs to rise
Going forward, Facebook said it expects costs in 2020 to increase to around $54 billion to $59 billion, from $46 billion to $48 billion this year.

The company is gearing up for an increased headcount in marketing, while a ramp up in efforts around privacy and security, as part of its obligations on a $5 billion settlement it agreed with the Federal Trade Commission in July.

Zuckerberg also warned he was expecting additional scrutiny from regulators over its acquisition of Instagram in 2012.

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Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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