Facebook’s Q3 Report and Impact to Advertisers
Q3 has ended and we are quickly approaching the halfway point of Q4. In this article I want to highlight Facebook’s Q3 report and what we should learn from it as advertisers. Though this article highlights Facebook’s earning report and key estimates, we can use these type of financial reports to draw conclusions as advertisers pertaining to Facebook’s next steps and how those impact us.
First of all is the Monthly Active User growth in Asia-Pacific – it increased more than 24% year over year. Facebook is making a strong effort in Asia-Pacific in what some say is an effort to continue the growth of Average Revenue Per User. How? you might ask… Here’s one theory: The user penetration in North America is nearly maxed out as there are 236 million accounts out of a total population of 330 million between the United States and Canada. So with 4.42 billion people in Asia-Pacific, there is great opportunity to add users which thus provides greater opportunity to advertisers. This eventually drives up the average revenue per user. We will continue to look for clients who have global markets with the improving ability to reach those markets. Check out what Beulah Meriam K had to say about the ARPU increases and MAU increases in APAC in her article on seekingalpha.com.
The second major take-a-way is that Facebook’s advertising revenue came in at $9.715 billion; a 42.5% increase year over year. This comes largely due to the increase in advertisers coming in over 5 million and increasing. What this means for agency business and for advertisers in general is that the cost to advertise on the platform is going up. There is only so much ad space and Facebook announced earlier this year that they were approaching max ad load. So, those who figure it out now are going to win in the end. Learn cheaper than the rest will pay.
Lastly, Average Revenue per User (ARPU) has increased over 20% year over year and is projected to continue to climb another 20% by the end of the year. Much like the increase in revenue as a whole, this is a strong indicator that the price of ad space is on the rise.
Garland here! Most have come to know me as Gar but in honor of my namesake, my grandfather I have grown to appreciate the unique name I have. Speaking of weird names, it’s actually how my wife Tasia and I met…something like “Hey nice to meet you. I know what it’s like to have a weird name too!” We’ve been together ever since and happily married for 2 years. We have 2 dalmatians Rio and Sochi and love spending time with our family here in Grand Rapids where we both grew up. We spend many weekends on Lake St. Clair where Tasia’s family currently resides. I love all things sports and am especially passionate about golf and the Michigan State Spartans!