Face­book gold streak con­tin­ues in Q3, boosted by video

Kuwait Times - - TECHNOLOGY -

NEW YORK: Whether it’s a video clip of your friend’s dog or a live stream of the pres­i­den­tial de­bates, you are likely watch­ing more videos on Face­book than ever. And that means you’re also more likely to see video ads. Face­book’s lat­est strat­egy is to grow both user-gen­er­ated and ad­ver­tiser-cre­ated videos as it tries to get a firm foothold in this nascent but grow­ing mar­ket. The strat­egy ap­pears to be work­ing. While Madi­son Av­enue is not known for risky ex­per­i­ment­ing, ad­ver­tis­ers are al­ready test­ing the wa­ters with live video. Gen­eral Mo­tors, for ex­am­ple, launched its elec­tric Chevy Bolt EV through Face­book Live this year.

“Peo­ple are spend­ing more and more time on mo­bile, es­pe­cially video,” David Wehner, Face­book’s chief fi­nan­cial of­fi­cer, said in an in­ter­view.

He said this has been a big fac­tor in help­ing drive up over­all mo­bile ad­ver­tis­ing. It helps on the video front that Face­book had suc­cess­fully tran­si­tioned from desk­top to mo­bile, de­spite early doubts. Now, when Face­book tries to sell video to its ad­ver­tis­ers, it can sim­ply point to past fi­nan­cial re­sults. The per­cent­age of ad rev­enue that came from mo­bile has in­creased ev­ery quar­ter since the com­pany be­gan re­port­ing this fig­ure in 2012.

In the July-Septem­ber quar­ter, Face­book had $6.8 bil­lion in ad­ver­tis­ing rev­enue, a 59 per­cent in­crease from a year ear­lier. Mo­bile ad­ver­tis­ing ac­counted for 84 per­cent of this. Face­book had 1.79 bil­lion monthly users as of Sept. 30, up 16 per­cent from a year ear­lier. Face­book earned $2.38 bil­lion dur­ing the third quar­ter, or 82 cents per share, up sharply from $896 mil­lion, or 31 cents per share, a year ear­lier. Ad­justed earn­ings were $1.09 per share, above the 97 cents that an­a­lysts polled by Fac­tSet had ex­pected. To­tal rev­enue rose 56 per­cent to $7.01 bil­lion, sur­pass­ing an­a­lysts’ ex­pec­ta­tions of $6.92 bil­lion.

Video ads will be­come more im­por­tant as Face­book sees a slow­down in how many ads it shows be­tween all the up­dates from friends, a mea­sure known as ad load. Face­book’s stock fell $8.77, or nearly 7 per­cent, to $118.20 in ex­tended trad­ing af­ter Wehner told an­a­lysts that “ad load will play a less sig­nif­i­cant (role in) driv­ing rev­enue growth” af­ter mid-2017, lead­ing to slower growth over­all.

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