What Facebook’s Revenue Announcement Means For The Ecommerce Industry

Last week saw Facebook announce first quarter revenues of $5.382 billion. While the figure itself is huge it is actually the growth that is most impressive – to put it in perspective, the figure is a 51.9% increase from what was reported this time last year. And it doesn’t stop there- the company’s net income soared by almost 200%. These figures, which far exceeded what analysts had estimated, were enough (unsurprisingly) to make Wall Street sit up and listen- with Facebook’s stocks rising more than 8% in the moments after their announcement was made. This is in stark contrast to Apple, whose stock actually took a 7% value hit.

This may be all well and good for Mark Zuckerberg and his clan but what does it mean for you, the ecommerce merchant?


Well, the most interesting thing about the numbers is, of course, how they have come about. In this case, despite Facebook having its fingers in a number of different pies (include in in-site shop pages, chat bot development and even the quest to bring the internet to previously unconnected locations) 96.6% of that revenue has stemmed from advertising, with 79% coming from mobile ads alone. If this growth continues, eMarketer predicts they will generate $22.37 billion in ad revenue in 2016 – a 31% increase on last year.

Yet it has traditionally Google which has been considered the advertising giant. Why? Well, for one they have, without a doubt, been leading the way –  all the figures back that up. But what is it that has brought about this widespread adoption? Psychologically Google has an advantage – when someone is using a search enginge they are actively seeking something out (the clue is in the name), an action that implies intent and lends itself to buying. Brand have then strived simply to be there at the other end of that query. Facebook however, and the ecosystem it has created, has its own advantages;

It has a huge (and we really do mean huge) active user base.

With 1.65 billion monthly active members worldwide, Facebook’s user base is bigger than the population of China. This figure is up 15% from a year ago and growth is predicted to continue. It’s a simple point but one which is hard to ignore – basically whatever your business, however niche, you will have existing and potential customers on Facebook. In the virtual space carved out by this social media platform, there is a huge captive audience- you either join the conversation or the conversation goes on without you.  

Facebook’s user base is not only large but active, spending a substantial amount of time within the platform.

20+ minutes is the global average for time spent on the social network per day- this constitues approximately 20% of the average user’s time spent online. In the US this figure is even higher- according to a recent announcement from Zuckerberg, as much as 50 minutes a day. For ecommerce merchants this is important, as the time a user spends on the platform is directly related to the opportunity you have to reach them- having an area of the web where users are regularly visiting, for extended periods of time, is invaluable and not a luxury brands have had to such a measurable extent before. The result is a high level of interaction, with 22 billion ad clicks within the Facebook ecosystem per year.


As The New York Times puts it,

“Your addiction is making Facebook astonishingly profitable. Put a little more kindly, your emotional and intellectual interactions on the social network are creating a great place for companies to advertise.”

Facebook is big news on mobile.

As previously mentioned 79% of Facebook’s Q1 revenue came from mobile ads alone. A fact that it not surprising when you consider that it has
1.51 billion mobile users (an increase of 21 percent year from last year), with 54% of its total user base accessing the service on mobile exclusively. Why should you care? With mobile ecommerce traffic overtaking desktop for the first time, it has never been clearer that brands need to be interacting with customers in a way that fits with their preferred device – a feat that Facebook is proving itself to excel at. |

It is possible to advertise on Facebook in a very targeted manner.

Last, but by no mean least, Facebook doesn’t only provide a large, captive, active and mobile savvy audience – it gives you the tools you need to best target them. In fact, most of the previous points would work against you if it didn’t. Facebook and the technologies that work with it (ourselves included) offer highly intelligent and specific options such as;

Demographic targeting – targeting according to age, gender etc.
Interest targeting – looking at the specific likes of a user.
Lookalike audiences – essentially cloning a group such as existing customers or people who have liked your company Facebook page.

With these options it is possible for marketers to reach not only an audience but the right audience – something that is imperative for a healthy ecommerce ROAS.

As the figures show an ad on Facebook is truly a digital force to be reckoned with- a social media site leading the way in what it means to be successful online, as well as enabling the digital success of other companies. This has all been demonstrated by the phenomenal and ever-growing investment of brands in its digital sphere.

However, it is also a busy and crowded marketplace – with many companies vying for the attention of the Facebook users. With this in mind, it is important to stand out from the crowd to best utilize the opportunity this platform affords you. Personalization has demonstrated itself as one of the best ways to do this – differentiating your advertising efforts by appealing to the individual and providing 12x ROAS. We will be showing you how to do exactly this, in our upcoming webinar…

 ‘Creating An Effective ROAS by Personalizing The Facebook Experience’
being held on May 24th. 

Learn how to:

  • Automatically create dynamic, personalized ads in real-time.
  • Effectively target Facebook users according to your objectives.
  • Increase average order value and conversion.

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