Facebook reported ad revenue growth of 53% in the fourth quarter as it put the pedal down on video ads and its mobile ad network.
Speaking on the quarterly earnings call, CEO Mark Zuckerberg told analysts that Facebook users now watch 3 billion videos per day on average, a figure that only includes videos directly uploaded to its servers – not shares from other platforms like YouTube.
The company is still in the early stages of monetizing all that video. In Q4, it expanded its silent autoplay ads internationally, but it's still early to evaluate marketer acceptance of the format. Two analysts asked if Facebook will build a business around premium video content, and COO Sheryl Sandberg gave this partial answer:
"What really matters is that consumers are using video on Facebook," she said. "I don't think it matters as much what the video content is. We're already seeing pretty explosive growth without that kind of [premium] content. We're certainly open to increasing video content that way, but we're still figuring out what that mix needs to be."
(One noteworthy sidebar for close observers of ad tech: CFO David Wehne told analysts Facebook is reporting revenues for its ad tech businesses – Atlas, LiveRail and Audience Network – on a net rather than gross basis. That means traffic acquisition costs will not be visible to investors, and these businesses will show a lower overall revenue impact on the company's earnings.)
Remarkably, Facebook's 53% quarterly growth rate – which many competitors would consider manna from heaven (e.g., Yahoo, whose ad revenue is still shrinking) – represents a deceleration, as the company ticks off a year since the launch of ads in the news feed. The slower growth was expected: Wehne warned investors of this certainty during the company's last earnings call, and analysts adjusted their estimates accordingly. Even so, Facebook as usual managed to beat the street.
Here are some additional revenue and user growth highlights from the earnings release:
- Mobile advertising revenue represented approximately 69% of advertising revenue for the fourth quarter of 2014, up from approximately 53% of advertising revenue in the fourth quarter of 2013.
- Daily active users (DAUs) were 890 million on average for December, an increase of 18% year over year.
- Mobile DAUs were 745 million on average for December, an increase of 34% year over year.
- Monthly active users (MAUs) were 1.39 billion as of Dec. 31, an increase of 13% year over year.
- Mobile MAUs were 1.19 billion as of Dec. 31, an increase of 26% year over year.