Facebook Sees Revenue Growth Through Its Ad Products for Marketers

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Facebook reported quarterly earnings this week that exceeded analysts’ estimates. Facebook’s revenue climbed by $10 billion to just over $27.5 billion, and the company’s net income for the year more than doubled to $10 billion.

The main way it increased its revenues “was by simply increasing the size of the pie,” reported Fortune. “During 2016, Facebook said it added more than 265 million new monthly active users. That’s almost as many users as Twitter has in total. Facebook now has more than 1.8 billion users who log on every month, and more than 1.2 billion users who do so every day.”

“We’re really excited to announce today that 65 million businesses are using our free Pages product and 5 million are using Instagram Business profiles,” announced COO Sheryl Sandberg in an earnings call. “More and more of these businesses are becoming advertisers, with over 4 million advertising on Facebook and over 500,000 on Instagram. As a result, our revenue base is becoming more diverse.”

Sandberg said Facebook was focused on three priorities: capitalizing on the shift to mobile, growing the number of marketers using their ad products, and making ads more relevant and effective by increasingly tailoring them by vertical.

Mobile has been a strong driver of growth as more than 1 billion of Facebook’s daily users access the site primarily on their phones or tablets. That a number grew by 23 percent in the last quarter, now accounting for about 84 percent of the company’s total ad revenue. “Marketers are increasingly seeing mobile as the opportunity it is,” noted Sandberg. “In 2016, we saw more marketers prioritizing mobile and especially mobile video.”

To grow the number of marketers using Facebook ad products, the company “continues to invest in making our free and paid products easier to use, expanding our online tutorials and offering creative tools to businesses of all sizes,” added Sandberg.

And to make its ad products as relevant and effective as possible, Facebook is increasingly tailoring them by vertical. “In 2016, we invested in Dynamic Ads, which allow advertisers to automatically promote products from their entire catalog,” noted Sandberg. “We expanded Dynamic Ads across Facebook, Instagram, and the Audience Network, and tailored them for verticals like travel and retail.”

With only a small fraction of the businesses on Facebook and Instagram advertising, “we know we have a lot of opportunity and hard work ahead,” Sandberg added. “In 2017, we’ll stay focused on helping businesses of all sizes reach customers around the world and grow.”

All this good news comes despite Facebook losing a $500 million copyright infringement lawsuit over Oculus from a VR company. Sandberg said the judgment was “not material” to Facebook’s business.

What is material to Facebook’s business, however, is the $3 billion IPO filed by competitor Snap. To that end, Facebook is letting brands sponsor augmented reality selfie lenses in the style of Snapchat.

Facebook is also talking to several Hollywood studios about using AR/VR to promote big-budget releases set to launch in March as an “unpaid experiment,” reports Ad Age. Snapchat’s Sponsored Lenses format has attracted Twentieth Century Fox for its X-Men: Apocalypse campaign and Sony, which used the platform to promote Ghostbusters.

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