Facebook, the world's largest social network, has steadily built its
advertising business to become the world's second-largest digital ad
platform after Google.
Now it's looking at ways to make more money from video ads and from
newer services like Instagram, the mobile photo-sharing app that it
bought for $1 billion in 2012.
Instagram recently announced it has over 400 million monthly users,
surpassing the 300 million who use the rival social networking site
Twitter. While Facebook has been introducing Instagram ads slowly — to
avoid irritating users by overloading them with commercial messages —
the company said in September that it would allow more kinds of ads,
including longer video spots, on the photo-sharing service.
With those new formats, Instagram could produce more than $250 million
in revenue for the current quarter, Evercore ISI analyst Ken Sena
estimates. Businesses will spend about $600 million on Instagram ads
this year — and nearly $1.5 billion in 2016, according to research firm
eMarketer.
"When we talk to advertisers and ad agencies, they're very interested in
Instagram," said eMarketer analyst Debra Aho Williamson.
One reason: In recent years, there's been a debate over whether teens
and young adults are forsaking Facebook in favor of newer, trendier
online services. But Williamson said young adults are "very visually
focused and pretty heavy users of Instagram."
Facebook doesn't disclose how much of its revenue comes from Instagram.
The company beat Wall Street estimates on Wednesday by reporting
third-quarter net income of $891 million, on revenue of $4.5 billion.
Profit was up 11 percent, while revenue grew 40 percent from the same
period a year earlier.
More than 1.55 billion people now visit Facebook at least once a month,
up 14 percent from a year ago. Daily users increased by 17 percent, to
1.1 billion. As in previous quarters, Facebook said a majority of users
are visiting Facebook on mobile devices, and mobile ads contributed 78
percent of the company's ad revenue.
Those results drove Facebook's stock up more than 3.5 percent in late trading, after shares closed Wednesday at $103.94.
Facebook has seen continued growth in revenue and users over the last
three years, but the company is growing more slowly as it gets bigger.
That's led it to consider new ways of showing advertising.
Facebook is also increasingly introducing new ways for its users to
share and watch video on the social network, positioning itself against
Google's popular YouTube service. CEO Mark Zuckerberg
told analysts Wednesday that Facebook users are now watching more than 8
billion video clips a day on the site, up from 4 billion in April.
(Facebook counts any clip played for at least 3 seconds as a "view.")
Analysts say Facebook has huge, untapped potential in both video and its
growing stable of apps and services, many of which operate separately
from the main social network. That includes Instagram, the WhatsApp
messaging app and Oculus VR, which makes virtual reality gear.
More than 800 million people are now using WhatsApp, the messaging app
Facebook bought for $19 billion in 2014, and another 700 million people
use the Messenger service that Facebook developed internally.
While the company hasn't spelled out plans to make money from those
apps, chief financial officer David Wehner told analysts Wednesday that
he's confident "there are going to be opportunities" in the future.
Zuckerberg also cautioned that it will take time for virtual reality
technology to gain wide adoption. But chief operating officer Sheryl Sandberg stressed Instagram's more immediate potential during the company's quarterly earnings call.
No comments:
Post a Comment