Facebook continues to attract more users and serious advertising dollars.
In its second quarter results, Facebook posted sharp increases in revenue and profit, beating Wall Street expectations.
The social media giant increased advertising revenue by 47 per cent to $9.16 billion, in the three months ended June 30.
Mobile advertising revenue was $8 billion (up 53 per cent), representing approximately 87 per cent of advertising revenue for the second quarter of 2017, versus approximately 84 per cent of ad revenue in the for the same period in 2016.
Total revenue was US$9.32 billion, up 45 per cent from the same period last year. Profit was up 71 per cent to $3.89 billion for the three month period.
Facebook’s half yearly net income was $6.95 billion.
“We had a good second quarter and first half of the year,” said Mark Zuckerberg, Facebook founder and CEO. “Our community is now two billion people and we’re focusing on bringing the world closer together.”
Facebook passed the two billion users milestone earlier this month and monthly active users were 2.01 billion as of June 30, 2017, an increase of 17 per cent year-over-year.
Daily active users were 1.32 billion on average for June 2017, an increase of 17 per cent year-over-year.
Facebook’s headcount was 20,658 as of June 30, 2017, an increase of 43 per cent year-over-year.
Emerging revenue streams
Facebook says it is in the early stages of monetising Messenger (by showing ads) and Whatsapp, which now has 1 billion daily users.
David Wehner, Facebook CFO, explained how the company thinks about monetisation in today’s earnings call:
“We’re focused on growing the user base, first and foremost. And then secondly, it’s about building organic connections between businesses and consumers. And then third, it’s about how do we build monetisation around those relationships.”
Another new revenue stream is Facebook’s Snapchat clone Stories, which is proving popular on Whatsapp and Instagram. Whatsapp Stories and Instagram Stories now have more than 250 million daily users on each platform and this quarter Facebook started putting ads in Insagram Stories.
“Large shifts in the way marketing works”
Zuckerberg said he has observed a large shift in the way marketing works (and no, it’s not just that marketers are giving him more money).
“In the first wave of marketing, people would buy ads and media they thought their customers might watch like a TV show that had similar demographics, but they wouldn’t know who saw their ads,” Zuckerberg said during the earnings call.
“The Internet gave people the power to target their messages to people who actually might be interested and to measure results much more precisely, and that was a big improvement. And now AI is taking this a step further.”
Zuckerberg said he is optimistic about how AI is going to improve Facebook’s core services in the coming years.
“Now you can put a creative message out there, and AI can help you figure out who will be most interested. A lot of the time you don’t even need to target now because AI can do it more precisely and better than we can manually. This makes the ads that you see more relevant for you and more efficient for businesses,” he said.