What Facebook Results Mean For Marketers [Charts]
Facebook’s 4Q2014 revenues were $2.59 billion, up a whopping 28.2% over 3Q2013. While great for Wall Street, Facebook’s financial improvement doesn’t necessarily spell success for marketers.
Facebook results: users
Facebook has a mind-boggling 6 billion likes per day from its 757 million users. Of note is the fact that US and Canadian users numbers have remained relatively flat. This is a sign that it’s a mature user base. (Here’s research foreshadowing Facebook’s decline.)
In terms of device usage, mobile only Facebook monthly active users (MAUs) account for roughly a quarter of the user base. About half of Facebook’s monthly active users use a mobile device at least some of the time. (Here is more data on mobile Facebook usage.)
Facebook results: Revenues
Facebook’s results revealed a disconcerting trend. Advertising accounts for over 90% of Facebook’s revenues. In 4Q2013, this resulted in increased revenues due to higher priced mobile ads.
Further, mobile advertising accounts for over half of Facebook’s ad sales.
Facebook revenues broken out by participant region reveals: the US and Canada account for 46.7% of revenues, Europe accounts for 28.1% of revenues, Asia accounts for 13.2% of revenues, and Other accounts for 12.0% of revenues. While other areas contribute to the bottom line, the US and Canada drive significantly more sales relative to their user population (19.4% of the 4Q2013 total).
A deeper look at Facebook’s earnings reveals 2 driving factors:
- Holiday-related advertising. This is a seasonal sales bump that Facebook gets every year. The lion’s share of these revenues come from the US and Canada, where Internet and Facebook usage are mature.
- Mobile advertising. Facebook’s users are moving to mobile, a fact noted here before. More importantly, a good proportion of the mobile population only accesses Facebook via mobile. Translation: Quick check-ins and content snacking. Since over half of Facebook’s revenues already come from mobile where there’s less ad real estate, future sales growth (or advertising opportunities) are limited. Further, expect Facebook to keep mobile ads artificially more expensive due to pressure to show increased revenues.
3 Factors marketers must consider re: 4Q2013 Facebook results
1. Don’t look for teens on Facebook
Facebook carefully omitted mentioning the teen demographic. (Here are the Facebook teen charts and data from 2013.) When asked directly about teens, they quickly pivoted to another point. By not answering this question directly, Facebook confirmed without providing direct fodder for stock prices that teen activity hasn’t changed significantly. If teen usage had increased, they would have discussed it as a win. (Note: This is confirmed by Global Web Index’ Global Social Media Trends that show Facebook’s sweet spot to be 25-34 year olds.) What this means for marketers: Teens, Facebook’s growth engine and key advertising demographic, continues to be on the downturn. Facebook is no longer the place where the cool kids are!
2. Not all users are of equal value for advertisers
Mark Zuckerberg emphasized that increasing Internet access globally would help Facebook. Since most mass product usage increases annually due to population growth. This is a fancy way to say Facebook will get higher than ordinary growth as Internet access expands.
Yet, this focus neglects the fact that most of the world’s wealth (and a disproportionate part of Facebook’s revenue base) is already online. Therefore, more Facebook users don’t necessarily translate to more revenues (although they may require additional costs.) What this means for marketers: Your potential target audience is probably already using (or may have left) Facebook. Therefore, diversify your social media interactions.
3. Higher quality Facebook ads are required.
Zuckerberg discussed serving ads that are as strong as content from member’s family and friends. Facebook neglected to discuss how it’ll determine ad quality and its impact on advertising pricing. What this means for marketers: Facebook ads, both creation and distribution, will increase in cost since they’ll need quality content and placements will carry a premium expense.
While Facebook should still be a part of your social media, content marketing and mobile strategy, as a marketer, you must understand that participants’ on-the-go, content snacking activity will translate to less time on the site, both mobile and desktop.
Bottom Line—don’t put all of your marketing and advertising resources into Facebook (or any single platform for that matter!) Facebook’s pressure to show strong financial results will reduce your content marketing’s reach and increase related advertising costs on Facebook.
What do you see in the future for marketers who want to use Facebook?
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