As mobile eats the world, Facebook is making a meal out of mobile advertising. The company reported Wednesday that roughly 84% of its full year 2016 revenue of more than $26 billion was thanks to mobile ads.
Facebook also saw strong gains this quarter in average revenue per user in the US and Canada, which shot up to $19.81 from $13.70 in Q4 2015. Read the full earnings release here and view the Q4 slide deck here.
The looming question is what 2017 will hold in terms of revenue growth. In Q3 2016, Facebook CFO David Wehner warned investors to expect revenue growth rates to decline in Q4 and said that increases in ad load will play a smaller role in driving revenue increases by the middle of this year.
Wehner continued to bang that drum.
Although Instagram is still a mostly green field in terms of ad load and its user growth is impressive – 600 million MAUs and 400 million DAUs – core Facebook continues to be the biggest business driver, Wehner said. Upping ad load on Instagram won’t materially offset the ad load slowdown on Facebook.
But there are other ad monetization opportunities brewing. Mobile video monetization, for example, will be a major priority in 2017, said COO Sheryl Sandberg.
“We’re seeing consumer video exploding on our platform, and that really creates the opportunity for video ads in the feed,” Sandberg said.
For the moment, most of those ads will be placed within Facebook’s current newsfeed product, while things like midroll monetization remain in the early experimental stages, she said.
The broader vision for video on Facebook will include longer-form content, said CEO Mark Zuckerberg.
Facebook is reportedly looking to license original video content, and yesterday, news broke that Facebook might be working on a set-top-box app for streaming video.
But in terms of strategy, Facebook is “focusing more on shorter-form content to start,” Zuckerberg said, of which there are several types: the content people produce socially for friends, promotional content that businesses and celebrities create to promote products and “a whole class of premium content” that creators need to get paid for.
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“We need to be able to support [premium content] with a business model,” Zuckerberg said, which will be – surprise, surprise – advertising rather than licensing deals.
The goal “is really to kickstart an ecosystem of partner content” oriented toward rev share with creators,” Wehner said. “We are funding some seed content to get the ecosystem going, but the focus is on rev share.”
Despite the specter of impending ad revenue declines, Facebook enjoyed its biggest quarter in terms of usage since it went public five years ago.
Daily active users clocked in at 1.23 billion for December 2016, up 18% from this time last year, while mobile DAUs increased 23% to 1.15 billion. Monthly active users grew 17% YoY to 1.86 billion at the close of 2016, about a quarter of the people on Earth. Mobile makes up a large majority (1.74 billion) of those users.
Considering that the bulk of monthly and daily usage on Facebook is mobile, Wehner declared that this is the last quarter that Facebook plans to include mobile-only breakdowns in its earnings reports.
