Despite privacy concerns and reports that people are spending less time on Facebook, advertising remains strong across its platforms.
Some 2.1 billion people use one of the company’s apps daily. Those numbers -- reported Wednesday during the company’s second-quarter 2019 earnings call -- along with an automated ad-placement technology that serves the ad in the best position across its portfolio of services based on numerous criteria, seem to be key factors.
On Wednesday, Facebook posted a profit of $1.99 per share versus an expected profit of $1.88 per share on revenue of $16.9 billion. The average revenue per user came in at $7.05.
Analysts seemed impressed. Ben Schachter, analyst at Macquarie Research, reports how regulatory concerns continue to impact Facebook’s stock and its “fundamental business in ways we haven’t seen before,” but says the company’s forward-looking profit-and-loss statement would look "much stronger without the looming regulatory issues that are clearly impacting how it is allocating resources.”
Schachter wrote in his research note that regulatory issues are not only raising costs, but impacting the timing of product rollouts and improvements, ad-targeting capabilities, potential mergers and acquisitions, and management’s time and focus.
Regardless of concerns around regulatory issues and an increase of investigations, Schachter points to the positives, such as revenues up 32% year-over-year, Instagram Stories and Feed as core growth drivers, and North America revenue growing by 30% YoY.
In May, Facebook launched Automated Ads to “level the playing field” for small businesses to take the “guess work out of creating effectives ads.” Advertisers answer a few questions and get a custom marketing plan with up to six options, targeting suggestions and a recommended budget, which sounds similar to Google’s small business support.
Facebook also introduced video editing tools to help SMBs quickly create video with images they have. Sheryl Sandberg, Facebook COO, pointed to Fernwood Fitness, a chain of women’s health clubs in Australia that used these tools to build a mobile-first campaign targeting women interested in fitness.
During the earnings call, she said the campaign nearly doubled their conversions to new memberships.
In addition to once again attracting smaller businesses back to Facebook, Sheryl Sandberg said success has come from an ongoing move to mobile and the company’s ability to automatically place ads across Facebook, Instagram and Messenger.
Automatic placements convert Feed ads into an Instagram Stories format and serve the ads wherever the algorithms calculate that the ad will get the best results.
Advertisers create the new formats for platforms like Stories and the platform does the rest.
It also helps Facebook users to adopt other formats across its properties. Sandberg said product innovations like this one helped Facebook grow to three million advertisers.
Interestingly, Facebook increasingly drives visits to brand websites. Site visits from Facebook rose 29% year-on-year, while visits from Instagram rose 56%, according to data from Merkle, a digital agency.
In Merkle’s Q2 2019 Digital Marketing Report (DMR) report data suggests that advertisers spent 8% more on Facebook during the quarter, up 25% YoY. The amount spent on Instagram grew 85%, with a 208% increase in impressions.
For advertisers who are active on both Instagram and Facebook, Instagram accounted for 35% as much ad spend as Facebook proper for the quarter, according to Merkle.