This time next year, Facebook won’t be able to fit any more ads in News Feeds. That’s what analysts listening to the quarterly earnings call on Wednesday heard, even as the social media giant blew past expectations because of what CNBC calls “exploding ad revenue.”
Recode summarizes: “Facebook is about to max out on the number of ads it can show users inside its flagship product, which means it will need to find other ways to grow the company’s ad business moving forward. Simply increasing the number of ads it shows people will not be an option.”
Recode’s Kurt Wagner writes on Wednesday that for the News Feed ad option, Facebook can do two things to increase the News Feed ad load: Grow the user base or “create better-performing ads that it can sell for more money.”
Here’s what marketers may do at this time next year:
Pay More for News Feed Ads
“Facebook will either need to do a better job proving its ads lead to sales,” writes Recode’s Wagner, “which it’s already trying to do, or offer more premium ads, like the commercials you might see on TV. This is why Facebook is pushing hard into video, especially live video, but premium video ads can be tough to sell on mobile, which is where the majority of Facebook’s ad business has gone.”
CNBC says Facebook’s mobile ad revenue is up 81 percent year-over-year. Mobile was $5.42 billion of Q2’s $6.24 billion in ad revenue. CNBC notes marketers pay more for ads that appear on Messenger, which reaches 1 billion mobile users.
Using (Live) Video
Facebook Live is a big deal to CEO Mark Zuckerberg, because he thinks it can provide relevant content to users. To that end, Facebook funded celebrities and publishers in order to gain content. The company also invested heavily in improving the network’s infrastructure in order to support video, CNBC says.
"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," CNBC quotes of Zuckerberg.
Wagner says Facebook appears to be leaning toward proving the value of premium video ads to marketers.
“Premium video ads can be tough to sell on mobile,” he writes, “which is where the majority of Facebook’s ad business has gone.”
Marketing in Other Places
Facebook’s Audience Network brings ads to other apps besides Facebook, Wagner notes. The network already sells ads in Instagram and will probably start selling them elsewhere soon, Wagner says, citing Oculus and WhatsApp.
Still, a consideration for marketers wanting a share of the eyeballs on Facebook is a stat from comScore’s April 2015 research showing 81 percent of the U.S. population using digital channels is using Facebook.
What do you think, marketers?
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