Facebook is doing really well; in the fourth quarter of 2015, it reached more than $1 billion in net income for the first time, and saw more than one billion people using the platform daily.
That news is mostly thanks to the success of its ad revenue, which grew by 57 percent to more than $5.6 billion. In its quarterly earnings call today with investors, Facebook executives discussed the increasing range of advertising products available to marketers, including mobile ads, videos, Instagram, Messenger and — in the future — virtual reality.
Both chief executive officer Mark Zuckerberg and chief operating officer Sheryl Sandberg, along with chief financial officer David Wehner, emphasized the importance of focusing their efforts on a positive user experience — especially when it comes to accessing Facebook on a mobile device.
Facebook mobile ad revenue reached $4.5 billion in the fourth quarter, which is 81 percent of total ad revenue and up from 69 percent of ad revenue one year ago. Sandberg shared that Facebook’s three priorities were capitalizing on the shift to mobile, growing the number of marketers using its ad products, and making its ads more relevant and effective.
“Our conversations with clients have shifted from if they should market on mobile to how,” said Sandberg, who called Facebook and Instagram, with 1.44 billion and 400 million monthly users, respectively, “the two most important advertising platforms.” (Of the top 100 advertisers on Facebook, 90 of them also advertised on Instagram in the fourth quarter.)
She also called the 2015 holiday season a “defining moment” for mobile marketing. “We provide a creative canvas, powered by technology that marketers can use to deliver great creative the highest-quality targeting at unparalleled scale.” Sandberg also shared that although there are 50 million small businesses using Pages, there were only 2.5 million active advertisers, so there is a big opportunity to increase that number.
To that end, Wehner said that by making the quality of the ads better and increasing their relevance to users, customers are exposed to more ads while businesses see a higher return on their investment. And in addition to seeing an inherent boost from the number of people using Facebook, he said, “We believe our efforts on targeting and measurement solutions enabled marketers to achieve better business results at better values.”
Sandberg said that Facebook encourages its advertisers to measure the results of their advertising, and has noticed advertisers shifting from proxy clicks to business results, like digital and in-store sales. “Our measurement tools like Conversion Lift and the Facebook pixel,” she said, “prove to marketers we are driving business and helps make our ads more relevant.”
Going forward, Zuckerberg said, Facebook (in addition to rolling out its “Reactions” and experimenting with virtual reality), will expand on enabling businesses to interact with customers on Messenger — as long as it makes sense for the customer. “There was a long time where people thought our business might not be as good because we had no ads on mobile. That was because we prioritized experience for people, even if it’s going be a painful thing for the company,” Zuckerberg said. “That’s how we think about messaging. We know that messaging is going be increasingly important. We have a formula for how we build these businesses; first we build a great consumer experience.”