Facebook Rides Video to More Than $6 Billion in Ad Sales

Mark Zuckerberg Calls It a 'Good' Quarter

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The sign outside the main entrance to Facebook headquarters.
The sign outside the main entrance to Facebook headquarters. Credit: Courtesy Facebook

In what could be the understatement of the summer, Facebook CEO Mark Zuckerberg kicked off a statement of the company's earnings on Wednesday by saying, "Our community and our business had another good quarter."

The social network had its best quarter ever, in fact, with $6.2 billion in ad revenue, an increase of 63% from the quarter a year earlier and an accelerated rate of growth.

In contrast, rival Twitter talked Tuesday about a slowdown in advertiser interest and posted just $600 million in revenue for the quarter.

Both Facebook and Twitter are rushing to become nearly all-video, all the time, partly because video can be so engaging for consumers and partly because advertisers will pay more for it. Both are going after premium video producers and entertainment and media stars to fill their platforms.

Twitter said Tuesday that video is now its No. 1 source of ad revenue. Advertisers are buying more Facebook video ads, too, although the company doesn't break out video ad revenue explicitly.

"We're particularly pleased with our progress in video as we move towards a world where video is at the heart of all our services," Mr. Zuckerberg said in the earnings statement.

Profit was more than $2 billion in the quarter for Facebook.

The company has been drawing marketers' attention with formats such as Canvas ads, which are basically fast-loading mini-websites for brands built into the social network, according to Jason Stein, CEO of social media ad agency Laundry Service.

"Media dollars are still rapidly moving to the social platforms, and Facebook continues to be the leader in volume of ad spending and performance," Mr. Stein said. "That's not a secret to anyone, their measurement targeting is great and video ads perform well. Canvas units are one thing advertisers are investing in more and more."

Facebook also is trying to capture more live video views with streaming content coming right into the platform from top publishers and media companies, although it has yet to incorporate advertising into its live push.

And it has made Instant Articles, fast-loading multimedia posts, available for all publishers. Publishers are increasingly reliant on Facebook for their distribution, and Instant Articles are one way they post stories and sell ads into them right on the social network.

Still, the industry can be uneasy with Facebook's dominance. Facebook said Wednesday that it now has 1.7 billion monthly users, up 15% from this time a year ago. Twitter, by comparison, said Tuesday that it has 313 million monthly users, up 3% from a year earlier.

On a conference call to discuss Facebook's latest results, Mr. Zuckerberg added that Facebook Messenger topped 1 billion monthly users in the quarter.

Sheryl Sandberg, Facebook's chief operating officer and second in command, said on the call that advertiser demand is increasing all around, especially from brand marketers, partly because of the company's targeting capabilities and formats like Canvas.

"We're seeing a lot of strength in brands [spending] and I think that's because of we have a combination of the data and the storytelling," Ms. Sandberg said.

Ad sales are increasing on Facebook because of user growth, longer time spent and higher ad load, Facebook CFO David Wehner said. Facebook generated almost 50% more ad views last quarter than in the period a year before, and ad rates were up almost 10%.

Facebook attributed the longer time spent on the platform to the rise in live video.

Mr. Zuckerberg started the earnings call by noting that "Chewbacca Mom," a surprise viral video sensation, drew 160 million video views. "As people look for richer and richer ways to express themselves, just like people in the past shared text and photo, in the future more of it will be video," Mr. Zuckerberg said. Facebook will be a "video first" platform, he added.

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