What Marketers Should Note From Facebook's Second-Quarter Earnings

By Jack Marshall Features Dow Jones Newswires

Facebook reported yet another surge in revenue during the second quarter, as advertisers spent $9.16 billion with the social media platform, 47% more than they did a year ago.

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The company's profits also soared, jumping 71% to $3.9 billion as marketers ramped up spending on its increasing array of ad products.

Chief Executive Mark Zuckerberg described the company's performance as "good."

Here are the most important takeaways for marketers from the company's earnings conference call:

Breaking 2 billion users

Facebook's ad revenue just keeps growing, and somehow so does its audience. Over two billion people used the company's services each month, on average, between April and June. That's more than a quarter of the world's population.

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But even more impressive is the number of people that use Facebook's products each and every day. Daily active users grew 17% during the second quarter to an average of 1.32 billion. For marketers looking to reach as many people as possible, that's a mighty big number. For context, rival social media outfit Snap said it attracted 166 million daily active users in the first quarter.

A focus on messaging

Facebook is beginning to introduce ads in its messaging products, but that's early days. First, the company is focused on driving successful "organic" interactions between businesses and consumers on its messaging platforms, Mr. Zuckerberg said.

If businesses find that Facebook's messaging platforms (such as Facebook Messenger and WhatsApp) prove a valuable and lucrative way to interact with customers, they're likely to place more emphasis on them compared with non-Facebook channels like their own websites, Mr. Zuckerberg said. That will generate monetization opportunities for Facebook down the line, of course.

"If you're a business and you have higher return-on-investment interacting with a person through a messaging thread than you do on mobile web, you're going to invest more in driving ads to the messenger thread, and building out your presence around the messenger thread," Mr. Zuckerberg said.

Buying results, not ads

Facebook has been talking about selling real-world outcomes to marketers instead of just ad impressions for years now, but the message is becoming clearer: Facebook is confident in its ad products and wants marketers to pay for results. Given that Facebook knows exactly who are, it's in a strong position to help connect those dots.

"For too long our industry has been focused on proxy metrics, but what really matters is when you see an ad and you buy a product. The more we can tie ad viewing to sales, the stronger our case is with our clients," said Sheryl Sandberg, Facebook's chief operating officer.

To that end, Facebook plans to provide more products designed to meet the needs of marketers in specific verticals, Ms. Sandberg added.

Desktop ain't dead

Yes, the world is increasingly going mobile, but that doesn't mean desktop is dead. In fact, Facebook's revenue from desktop devices grew 17% during the second quarter from a year ago, despite a continued decline in desktop usage. That's in part thanks to Facebook's efforts to evade ad-blocking technologies, the company said. There's life in the old desktop dog yet.

Ad growth will decline this year

Facebook's chief financial officer, David Wehner, reiterated comments he made on the company's first-quarter call, and again forecast a slowdown in ad revenue growth for the second half of the year. That's because ad load is maxed out across its services, Mr. Wehner said, and the company expects ad impressions from video initiatives to grow relatively slowly as it gets new ad products off the ground.

Write to Jack Marshall at Jack.Marshall@wsj.com

(END) Dow Jones Newswires

July 26, 2017 19:10 ET (23:10 GMT)