- Facebook's advertising revenue rose 17% to $17.4 billion in Q1 from a year earlier, masking a steep drop in sales last month as the coronavirus pandemic hurt demand. With many people stuck indoors during lockdowns, the social network's daily active users (DAUs) grew 11% from last year to an average of 1.73 billion in March, per an announcement.
- The average price of ads purchased slumped 16% in the quarter, a decline that mostly occurred in the later part of March, Facebook CFO David Wehner said in a conference call with analysts. The company saw signs of stability in the first three weeks of April with ad revenue that was flat compared with a year earlier, per its announcement.
- Facebook's average revenue per user (ARPU) rose 8% to $6.95, while the U.S. and Canada experienced the highest growth of 13% to $34.18. Its total revenue grew 18% to $17.7 billion, slightly beating analyst estimates of $17.4 billion, CNBC reported.
While Facebook reported continued growth in ad revenue for Q1, its commentary about the current quarter and outlook are more meaningful for mobile marketers who are trying to navigate the disruptions of the COVID-19 pandemic. The social media behemoth has extensive global reach and is quick to feel shifts in ad spending, particularly among small businesses that can set up targeted campaigns on the platform with a modest budget. CFO Wehner's remarks about recent signs of stabilization in ad revenue may indicate that the financial effects of the health crisis for ad platforms aren't as bad as feared, but those results won't be known until the company reports this quarter's results in another three months.
While Facebook didn't provide a revenue breakdown for its social network and Instagram, the company's two main sources of revenue, media buying agency Merkle observed several key Q1 trends for the platforms. Among its clients, spending on Facebook ads rose 19% in Q1 from a year earlier, while cost per mille (CPM) surged 36% amid a 13% drop in impressions. However, CPMs started to drop late in the quarter as demand declined because of the pandemic. Advertiser spending on Instagram surged 39% from a year earlier as impressions rose 80%, though CPMs fell 23%, per Merkle.
The company's results help to confirm other recent earnings reports that indicate the pandemic didn't have a pronounced negative effect on revenue until very late in the quarter. Google this week said total ad revenue including YouTube rose 10% from a year earlier, but most of that strength was seen in January and February. Describing the first three months of the year as a "tale of two quarters," parent company Alphabet's CFO Ruth Porat said sales fell in March amid business closures. Snap last week said its revenue jumped 44% from a year earlier as it signed up 11 million more users to its image-messaging app. Twitter today said revenue grew 3% from a year earlier, though sales fell in March, CNBC reported.
Facebook is seeking to help small businesses worldwide that broaden its revenue base among a wider group of advertisers. The company this month started accepting applications for a $100 million grant program aimed at helping 30,000 small businesses in 30 countries where it has offices, COO Sheryl Sandberg said in prepared remarks. About half of the grants in the U.S. are earmarked for women, minority and veteran-owned businesses that are most vulnerable in economic crises, she said. These gestures of goodwill can help to strengthen Facebook's brand among small businesses and form ties that may last after the pandemic subsides.