Facebook Outlines Messenger Advertising Plans, But Remains Focused On Video

Facebook is pretty much minting money at this point.

Despite concerns over ad load maxing out in the news feed, Facebook posted revenue of $9.32 billion for the second quarter, up 45% year over year from $6.43 billion.

Mobile ad revenue at $8 billion was responsible for the vast majority of Facebook’s overall revenue in Q2, and it’s still growing. Mobile ads represented 87% of revenue for the quarter, up from 84% at this time last year.

Although CFO David Wehner reiterated that core Facebook is the primary driver of business, there’s inventory waiting in the wings.

Facebook doesn’t disclose revenue numbers for Instagram, but the platform reached 700 million monthly active users in April. Of those, around 200 million people are using Instagram Stories every day.

Monetization is too new on Messenger for Facebook to break out revenue numbers – Facebook rolled out ads in its messaging app in early July – but with 1.2 billion monthly active users, the scale speaks to the revenue potential.

And WhatsApp, Facebook’s other messaging property, is a green field that Facebook has hardly even begun to tap from a monetization perspective.

But doubling down on monetization in Messenger, and then perhaps WhatsApp down the line, will be the last phase in a three-step process, Wehner said.

“We’re focused on growing the user base, first and foremost, and then, secondly, it’s about building organic connections between businesses and consumers,” Wehner said. “Third, it’s about how do we build monetization around those relationships. We’re further along with Messenger than we are with WhatsApp.”

Wehner was emphatic that early efforts in Messenger monetization will not offset the expected revenue slowdown in the latter half of the year due to Facebook’s plan to stop blocking ad blockers on desktop and its increased investment in video, where there are fewer impressions to be had.

Messaging is “not a near-term overall Facebook growth driver,” he said. “Much like Instagram in the early days, we’re going to be cautious, but unlike Instagram, this is not a feed-based product, so there are more unknowns here.”

Although investors barraged Facebook with questions about how it’s going to monetize its messaging platforms, CEO Mark Zuckerberg called attention to video as the bigger – and nearer-term – fish the company plans to fry.

“Over the next couple of years, the much bigger driver of the business and determinant of how we do is going to be video and not Messenger,” Zuckerberg said.

But regardless of how Facebook decides to tap into video or move forward with mining its ecosystem of apps, user engagement continues to grow on the main platform.

Daily active users clocked in at around 1.32 billion in June, up 17% YoY, while monthly active users nudged past the 2 billion mark to 2.1 billion as of the end of June.

Average revenue per user was also on the uptick in the US and Canada, increasing from $14.23 to $19.38.

 

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