Facebook ad revenue tops $16.6 billion, driven by Instagram, Stories

After more than a year of criticism over its mismanagement of user data and privacy concerns, Facebook’s 2018 fourth-quarter earnings report for 2018 showed ad profits did not suffer. On Wednesday, Facebook reported advertising revenue at $16.6 billion for the final quarter of last year, up 30 percent year-over-year.

Total revenue earned during the quarter was $16.9 billion, with daily active users (DAU) at 1.52 billion, up 9 percent year over year.

Facebook reports strong ad revenue. Facebook reported its average price per ad decreased 2 percent in the fourth quarter, with the number of ad impressions served across its platforms up 34 percent. Facebook chief financial officer David Wehner says impression growth was primarily driven by ads on Instagram, both regular ads in the Instagram feed and Stories ads, along with Facebook mobile News Feed ads.

“Obviously, we believe we’ve got the best advertising products out there in terms of being able to deliver measurable business results to clients. And so we think that does help us in that environment,” said Wehner during the earnings report call. The CFO did note the company is facing a deceleration of revenue growth in 2019.

Facebook did not break out advertising revenue by ad product type, but did report 93 percent of ad revenue during the fourth quarter came from mobile advertising.

Facebook Stories ads and Instagram shopping. In response to a question during the earnings call regarding Stories ad adoption, Facebook chief operating officer Sheryl Sandberg reported two million advertisers were currently using Stories ads — but did not clarify if those were Facebook Stories or Instagram Stories ad units. Facebook did say that Instagram Stories has reached 500 million daily users — half of the platform’s total one billion users.

CEO Mark Zuckerberg followed Sandberg’s comments saying the company still has a lot of work to do to monetize Facebook Stories at the same level as the News Feed.

“I’m confident that we’re going to get there, but I want to make sure that we’re giving the right outlook on how we expect the near future to go,” said Zuckerberg. The CEO said the area he’s most excited about is Instagram shopping and commerce opportunities.

“There’s a lot of natural activity happening here, and this year I expect us to deliver some qualitatively new experiences around that,” said Zuckerberg.

User growth across Facebook, Instagram and WhatsApp. Facebook had 1.52 billion DAUs during the last quarter of 2018 — up nine percent year-over year — and 2.3 billion monthly active users.

Of the 1.52 billion global users during the fourth quarter, 186 million were located in the U.S. and Canada.

The company estimates 2.7 billion people around the world are using Facebook, Instagram, WhatsApp or Messenger each month — with more than two billion using at least one of the platforms daily.

Why you should care. Any advertiser concerns over Facebook’s ongoing user privacy issues impacting the platform’s ad performance or user engagement appear unfounded based on this latest round of earnings data. Facebook’s decreased average ad prices and increased ad impressions are a boon for marketers wanting to optimize ad dollars.

“It’s clear that overall, the Facebook family of apps has the breadth of formats and the reach marketers are looking for when it comes to engaging with their audiences and placing ads,” says Yuval Ben-Itzhak, CEO of Socialbakers — a Facebook marketing partner.

Aaron Goldman, CMO for 4C (another Facebook marketing partner) expects Facebook video advertising to see more activity this year.

“In 2019, video will become an even bigger focus with formats like Stories taking center stage across the Facebook Inc. portfolio, which includes Messenger and WhatsApp alongside Instagram and Facebook,” says Goldman, “We also expect growth with in-stream video as Facebook delivers more long-form, curated and original programming through Watch and IGTV.”