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January 29th, 2015 FACEBOOK none Comments

In 2014 Facebook turned 10. During its full-year earnings call this morning, CEO Mark Zuckerberg talked about the network’s plans for the next decade. COO Sheryl Sandberg said that 2015 would be the company’s biggest year for it, and outlined plans to “aggressively invest” in ad tech and measurement in the year ahead.

Revenue for the year to 31 December reached US$12.47 billion, a 58% rise year-on-year. Net income for the full year was US$2.94 billion. Ad revenue is an increasing part of that growth.

In the final quarter of the year revenue reached $3.85 billion, a year on year increase of 49%. Revenue from advertising was $3.59 billion, a 53% increase from the same quarter last year.

Mobile advertising revenue represented 69% of advertising revenue in the fourth quarter. A year ago it was 53%. There was a 1% increase in desktop ad revenue, despite desktop usage being down. Desktop usage will continue to decline while mobile will continue to rise, the network said.

During the final quarter of the year Facebook invested $517 million in capital expenditure. It expects to invest between $2.7 and $3.2 billion in CAPEX in 2015 which will go on ad tech and measurement tools, which Sandberg said has made a big impact on advertisers confidence in Facebook this year.

Sandberg said: “Growing numbers of marketers are using our ad products. The market increasingly understands that we have the leading mobile ad platform and the only one that delivers people-based mobile marketing at scale.”

The average price per ad continues to increase as demand rises, while total ad impressions declined, in part due to the redesign of the desktop right hand rail which now serves fewer ads.

In terms of outlook, Facebook finance chief Dave Wehner, said 2014 was a “great year” but added: “We’re still in the early stages of building out many aspects of our ad business,” so those numbers are only expected to upwards.
Facebook also invested $1.7 million in its own marketing and advertising costs in 2014, up from $997,000 in 2013.

Last year Facebook was also plagued with reports around its decline among certain demographics in 2014 – namely teenagers – who some reports have said are leaving Facebook in swathes. Facebook reported an increase in overall user numbers but didn’t split out demographics.

Daily active users reached 890 million, an increase of 18% year-over-year. On mobile, daily active users reached 745 million, an increase of 34% year-over-year.

There were 1.39 billion monthly active users – a 13% year-over-year increase. On mobile it was 1.19 billion, a 26% year-over-year increase.

Video and premium video ads, the most high-profile advertising unit launched last year, were a hot topic in the Q&A on the earnings call. Sandberg said that momentum for video ads was growing, feedback was good and revenue from it was increasing because they “blend in” with the content users are posting.

She added that the fact that there is so much consumer video being post on Facebook, there is a bigger opportunity to grow its video ad business.

Instagram, Whatsapp and Messenger will be focus points for Facebook in 2015 as it looks to monetise its acquisitions and the messenger platform. Search too, will be a big thing for Facebook in the year ahead, but Zuckerberg said that Facebook is not really thinking about advertising within its search business yet.

Zuckerberg said: “Whatsapp and Messenger will connect hundreds of millions of more people, become indispensable for people and will be important contributors for our business. The [user] numbers speak to the quality of the product and the size of the opportunity.”

Instagram, Sandberg said, will “become core to brand building”.

Zuckerberg also deflected questions about Facebook’s intentions to grow revenue to satisfy shareholders at the cost of consumer experience.

“It’s less about increasing the volume of the ads but about increasing the quality of the content and the targeting. It was a controversial strategy internally but it’s fuelling our growth,” he told one investor on the line.

“We are a mission driven company … if we were really just focused on making money we would put all of our focus on increasing ads, but our mission is to connect the world – it’s important that investors know that,” he told another.

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Henry Sapiecha

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