Facebook's next big bets include Ad Breaks, linking ads to sales
- Facebook's pivot to a video- and camera-first platform was on full display again during a Q1 earnings report that beat expectations, with quarterly revenue hitting $8.03 billion — up 49% from the year-ago period. Now that the company has concretely outlined plans for more video content, "Ad Breaks" — essentially a mid-roll format — appear increasingly central to driving publisher adoption and revenue.
- Facebook CFO David Wehner noted that "Ad Breaks is going to allow us to have a monetization strategy with that longer-form content" on a company earnings call. COO Sheryl Sandberg additionally noted Facebook was "pleased" that early tests of the format were going well, but added that it's still early days.
- The Wall Street Journal, in its write-up on the earnings, noted that some major advertisers, including WPP's GroupM, are still skeptical of Facebook's video offerings, calling them "uncertain ground" in a report. GroupM's report noted that, for every 20 video ads served on Facebook, only one was watched for 10 seconds or longer and just three were watched for at least three seconds, per the Journal.
Facebook is nearing 2 billion monthly active users — it hit 1.94 billion in Q1, per the earnings release — and it needs to realign monetization strategy as a slowdown in traditional display and other static formats continues unabated. Wehner, who's previously brought up the issue, emphasized on the call that "ad loads will play a less significant factor in driving revenue growth after mid-2017."
Video and mobile video, in particular, are essential to Facebook's revenue growth going forward, with offerings like Live and also premium, TV-like content increasingly at the center of that push. In the past, Facebook has been battered by accusations that it doesn't provide marketers with accurate measurements for key video metrics such as viewability, which the Journal noted might be fueling marketers' skepticism.
Sandberg sought to allay some of those concerns on the call, pointing to the number of third-party partnerships the company made with measurement firms in Q1 and also its recently launched Marketing Mix Modeling (MMM) portal, saying the company is very focused on boosting its strength in this area. However, Sandberg seemed to downplay the value of certain metrics later in the call.
"It's also worth noting that the metrics that really matter at the end are driving sales," she said. "[A]ny of the engagement with ad metrics, whether it's remembering an ad going back to — people have been measuring that for a long time too, how long a video ad is viewed, are only proxy metrics. What matters is the impact on sales."
Sandberg's comments might be a veiled criticism of Procter & Gamble's Chief Brand Officer Marc Pritchard, who, at the beginning of the year, put out a call to action for the CPG giant's advertising partners to receive third-party accreditation for metrics like viewability or otherwise lose its ad business. Pritchard's initiative was seen to be spurred, however indirectly, by Facebook's viewability shortcomings. P&G is the world's largest advertiser, and Pritchard's demands lead a number of digital players, including Facebook, to submit to audits by the Media Rating Council.
In other video-related areas, Facebook's number of products copying Snapchat appear to now be outperforming their obvious inspiration. Offerings including Instagram Stories or the newer WhatsApp Status have surpassed Snapchat's daily active user base despite only being available for a fraction of the time.
"I think we were a little bit late to the trend initially around making cameras the center of how sharing works," Facebook CEO Mark Zuckerberg said on the earnings call, without mentioning Snap directly. "But I do think at this point we’re pretty much ahead in terms of the technology that we’re building [...] And I would expect us to continue leading the way forward on this from this point on."
For another look at Facebook's Q1 user and revenue growth, check out Andrew Hutchinson's analysis over at Social Media Today.
- Investor Relations Facebook Reports First Quarter 2017 Results
- Seeking Alpha Facebook (FB) Q1 2017 Results - Earnings Call Transcript
- The Wall Street Journal Facebook Revenue Surges, Fueled by Mobile
- TechCrunch Zuckerberg thinks Facebook was 'late' to competing with Snapchat, is now 'ahead'
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