Facebook's Video Helps Drive $9B in Ad Sales, Up 47%

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Facebook founder and CEO Mark Zuckerberg waves during the Allen & Co. conference in Sun Valley, Idaho, in July.
Facebook founder and CEO Mark Zuckerberg waves during the Allen & Co. conference in Sun Valley, Idaho, in July. Credit: David Paul Morris/Bloomberg

Facebook ad sales topped $9 billion last quarter, proof that its heavy investment in video is paying off, according to industry watchers.

The company is holding steady at about 2 billion monthly users, the company also said as it released its latest quarterly results on Wednesday. Its nearly $9.2 billion in ad revenue represented a 47% gain over the period a year earlier. For Facebook, it was a more lucrative quarter than even investors expected.

Aaron Goldman, chief marketing officer at 4C, a major buyer of Facebook ads on behalf of marketers, said the social network saw a "step change" in the amount of video ads brands were buying on the platform. Goldman speculated advertisers may have tested out Facebook video advertising during a period when YouTube was facing criticism for hosting offensive content, which led to a tempory revolt by brands.

"We think Facebook benefitted from the YouTube boycott," Goldman said. "The walled garden nature of Facebook lends well to brands' safety."

4C saw advertisers increase video spending on Facebook by 40% last quarter.

Facebook has been leaning very heavily into video, testing new formats like mid-roll commercials that pop up during live video and videos on demand.

Facebook also has 1.3 billion daily users, according to the earnings report. Another striking number: 87% of its ad revenue in the quarter came from mobile.

Also on mobile, the company's Instagram has 700 million monthly users and its Messenger app has 1.2 billion, Facebook said.

Facebook is starting to ramp up the ad products on both those apps because it has said it would soon run out of ad space in the main News Feed.

On Wednesday, Facebook is holding a call with Wall Street analysts and is likely to address its plans to spend more on developing original content for a new video section.

Facebook has been in talks with multiple media partners to produce shows for the social network and get more people watching video for longer. Reality shows, sports and even scripted series are in the cards, and Facebook is expected to release its first lineup of programs by mid-August, according to Bloomberg News.

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