Facebook gold streak continues in Q3, boosted by video

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.