Facebook ad revenue up 46% in Q1

Zuckerberg: smile could be tempered if privacy changes by Apple affect Facebook's business (Photo: Chip Somodevilla/Getty Images)
Zuckerberg: smile could be tempered if privacy changes by Apple affect Facebook's business (Photo: Chip Somodevilla/Getty Images)

Total revenue rose by 48% and income by 94%, even as regulatory and technology headwinds, including the launch of Apple's iOS 14, could hobble the social network's ad-led growth.

Facebook posted strong numbers for its latest quarter, boosted by higher ad rates and an increase in the number of ads it delivered, even as the firm edged away from its core focus on social media to bolster offerings in online commerce.

For the first three months of its financial year, Facebook's revenue rose by 48% to $26.2bn (£18.7bn), up 48% compared with the previous year. This includes advertising revenue up 46% to $25.4bn – while other revenue, currently a small part of the business, grew 146% to $732m. Income rose 94% to $9.5bn. 

CFO Dave Wehner told analysts that the growth was largely driven by product verticals such as online commerce, and an increase in demand from small and medium-sized advertisers. Growth was strongest in Europe at 53%. Rest of World, Asia-Pacific, and North America grew 47%, 46%, and 42%, respectively.

Despite being lifted by its ad performance in the past quarter, the company also admitted it is also facing "ad targeting" headwinds, mostly on account of shifting regulatory positions and technology shifts, most notably from Apple. The iPhone maker has privacy changes in iOS 14 that make it harder for companies to target ads to consumers. 

Meanwhile, Facebook continues to build out its ecommerce offerings on different fronts, including enhanced ability for creators to make money and expanded digital-payment capabilities.

"Commerce has been growing in our services for a while, but it has become a lot more important as the pandemic has accelerated a broader shift towards businesses moving online,” CEO Mark Zuckerberg stated.

The company says more than a billion monthly active users visit its Facebook Marketplace. In terms of digital payments, Facebook is working on both its Diem digital currency and Novi digital wallet, to boost its internet commerce business.

“Commerce across all these platforms is going to be very important, and certainly in a platform that we’re building like this, we want to enable payments very easily to make it so the economics all work out for developers,” Zuckerberg said.

In a call with analysts, he provided more context and data on how Facebook says it is capitalising on the shift towards ecommerce.

"Businesses using the WhatsApp Business API are already sending more than 100 million messages per day," he noted.

"Over the past year, during the height of Covid, total daily conversations between people and businesses on Messenger and Instagram grew by more than 40%. More than three million advertisers are already using 'Click-to-Message' ads to direct people to Messenger, and since we introduced 'Click-to-WhatsApp' ads, nearly one million advertisers have already started using them too." 

Looking at its overall business for the quarter, Facebook reported 3.45 billion monthly users across its family of apps, compared with 3.30 billion in the previous quarter, and a rise of 15% year-on-year.

In the US and Canada, Facebook’s user base remained flat at 195 million daily active users for the second consecutive quarter. Its user base in Europe increased by 1 million to 309 million.

Asia-Pacific continued to be the big user magnet, growing to 760 million users, versus 744 million in the previous quarter and 678 million a year ago.

While user numbers held firm overall, Facebook's per user revenue slid to $9.27, from $10.14 in the previous quarter. 

This article was first published on Campaign Asia


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