Facebook Benefits From Expanded Video Content, Digital Ads

Facebook reports that its Q1 profit leaped 76 percent to $3.06 billion, putting to rest concerns that video-ad performance or graphic content stymied growth. Alphabet enjoyed 29 percent growth in net profit in the same quarter, apparently undamaged by brands finding their content advertised against objectionable YouTube videos. The two tech titans currently account for 99 percent of the online ad industry’s revenue growth, says Pivotal Research, even as marketers express growing concern over fake news and live video issues. Meanwhile, Facebook continues to push new video content.

According to The Wall Street Journal, eMarketer states that Google accounts for 33 percent of the global digital ad market, and Facebook holds 16 percent. Facebook’s growth in digital advertising has “helped drive its stock up 29 percent” this last year, as has the fact that “the number of users who check into Facebook at least once a month rose to 1.94 billion.”

Despite the concerns about new ad formats impacting share price in after-hours trading, “the 49 percent jump in quarterly revenue to $8.03 billion was a sign of how marketers are increasingly embracing Facebook and Instagram.”

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Facebook chief executive Mark Zuckerberg early on focused the company on mobile, which fueled its growth and continues to be key to its business. But Zuckerberg has now added video to the mix, creating “more opportunities for Facebook to show more-expensive video ads,” even though it also creates uncertainties and concerns, including warnings of “an anticipated slowdown in advertising in the news feed.”

In response, Facebook is looking to “TV-like original programming” to “change the way people currently use the platform and eventually draw marketing dollars that have traditionally gone to television.” It’s also testing “ad breaks” in the middle of live broadcasts and on-demand videos.

But a report from GroupM, WPP’s ad-buying unit, isn’t so sanguine. It reveals that “for every 20 video ads served in the news feed, just one was watched for 10 seconds or longer and three watched for at least three seconds.” Even so, an RBC Capital Markets survey says that, “65 percent of advertisers buying Facebook ads plan to spend even more.”

Variety adds that, as Facebook approaches the two billion monthly active user mark, it is, according to company CFO David Wehner, “looking at kickstarting an ecosystem for longer-form content,” including sports. Zuckerberg said the goal is to create “some anchor content” for the video tab, although he didn’t say what kind of programming Facebook was looking for. Wehner says that the company will “eventually move to a revenue sharing model for long-form video content,” but in the near-term will invest its own money to get content rolling.

This investment is a reflection of the 32 percent growth in video impressions in Q1, which Wehner “in part attributed to recently-instituted tweaks that give more weight to longer-form videos in the news feed.” Facebook continues its efforts in augmented reality, says Zuckerberg, who reports the company is “adding camera functionality to all of its apps, and getting users to share photos with stickers and other digital add-ons.”

Related:
Facebook Scrambles to Police Content Amid Rapid Growth, The New York Times, 5/3/17
Facebook Messenger Rolls Out Instant Games Worldwide, TechCrunch, 5/2/17
Twitch Entices Video Creators With More Revenue Sharing, The Wall Street Journal, 4/21/17