Facebook beats revenue estimates despite data scandals

Apr 25, 2019 | Facebook marketing

Facebook has exceeded revenue expectations and matched estimates for its daily active user growth.

The company said it counts 2.7 billion monthly users across the its family of apps, which is unchanged compared to last quarter.

Facebook saw its user base in Europe grow to 286 million daily active users, up from 282 million last quarter. The company’s user base in the U.S. and Canada remained flat quarter-to-quarter at 186 million.

The company said average revenue per user was $6.42, up 16% from $5.53 a year ago.

The FTC has been probing Facebook since March 2018 following reports that political consulting firm Cambridge Analytica had improperly access the data of 87 million Facebook users. To date, the FTC’s biggest fine against a tech company was in 2012 when Google agreed to pay a $22.5 million penalty due to its privacy practices.

“We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion,” Facebook said in a statement. “The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”

The rise of Stories ads

The company is undergoing a major transition from News Feed ads as it grows ad revenue from its newer Stories products. CEO Mark Zuckerberg on Wednesday said Facebook, Messenger and WhatsApp’s Stories features now have 500 million daily active users, joining Instagram, which hit that mark in January. Facebook COO Sheryl Sandberg on Wednesday said the company now has 3 million advertisers using Stories ads across Instagram, Facebook and Messenger.

“Marketers find more value in Facebook than its competitors”

Yuval Ben-Itzhak, CEO, Socialbakers: “As marketers continuously look to engage with their audiences in the digital world, it comes as no surprise that despite the headlines and privacy questions, brands continue to pour their ad dollars into Facebook services in order to reach their audiences at scale.

“At the same time, users are also not abandoning their use of the app. Social media has become a habit with consumers. As such, they are asking Facebook to improve its platform in regards to privacy vs. changing their own habits.”

“Our data shows that marketers looking to drive value for their businesses via digital marketing find more value in terms of scale and audience engagement from Facebook and its suite of services than from competing platforms. With 2.7 billion monthly active users, Facebook’s family of apps is still where most consumer-to-brand engagement happens online.”

“Stories becoming ad standard”

Aaron Goldman, CMO, 4C Insights: “Facebook continues to prove itself as an indispensable part of the marketing mix. It provides a breadth of reach and depth of targeting that’s hard to replicate on other platforms. With Instagram continuing to orient more around commerce, the app is poised to contribute even bigger growth. Meanwhile, Messenger and WhatsApp are waiting in the wings as Stories adoption increases and the format becomes a standard advertising opportunity across the Facebook family of apps.

Overall, Facebook is positioned well for video ad budget allocation as brands look to drive efficiency across channels. To that end, advertisers using Scope by 4C increased their video ad spend on Facebook in Q1 of 2019 by more than 30% year-over-year.”

“Too big to fail”

Josh Krichefski, CEO at MediaCom, said: “In the midst of criticism over how the company handles the privacy, safety and data of its users, Facebook has managed to deliver steady revenue and user growth numbers for Q1. It’s clear that users and advertisers haven’t been deterred by the scandals, and it would be fair to say that the social media giant might just be too big to fail.”

“What we’re really seeing at the moment is a maturing of the social media landscape. Both Twitter and Snap have also had strong weeks, posting solid earnings. What all three companies have shown is that revenue growth is dependent on improving the user experience – whether that’s Twitter refining how people view their feeds or Snap fixing the quality of its Android app – rather than simply rapidly amassing new users.

“It used to be purely a numbers game of which platform had the most users, but success is now defined by not only how many people are on a social media platform, but how they are actually using it. A news feed that you can easily scroll past or a quick snap from a friend that you look at for 30 seconds isn’t going to cut it.

“There’s more than enough room in the landscape for all three platforms; each give users a different experience and are used for different reasons. It’s less about competing for users; people don’t choose one over the other. But they do have a preference for which platform they spend more time on. For example, Snap introducing a new gaming function and its Discover video platform demonstrates the company’s commitment to increasing the time that users spend on the app.”

“Will Facebook’s pledge to improve privacy be the silver bullet to all its problems? Probably not. But when viewed alongside the recent news from Snap and Twitter, it is a demonstration of maturity that will give advertisers more confidence in the social media platforms.”

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