Facebook this week reported a 37% increase in ad impressions compared to this time last year and 6% decline in ad costs. The growth in ad impressions were driven primarily by Facebook News Feed Ads, Instagram Stories Ads and Instagram Feed Ads, said Facebook CFO David Wehner during the company’s third quarter earnings call.
“The year-over-year decline in average price per ad was primarily driven by the ongoing mix shift towards geographies and Stories Ads which monetize at lower rates,” said Wehner.
Wehner also confirmed, during the Q&A section of the call, that certain ad optimization efforts resulted in an increase in ad load on Instagram.
“On the Q4 outlook, we are lapping a few different product optimizations we’ve made. A couple of those that I would cite is optimizations in how the ad auction operates, which can have an impact, and also, an increase in ad load on IG [Instagram] Feed and Stories,” said Wehner.
Ad revenue up 28% year-over-year. Facebook reported another strong quarter with ad revenue at $17.4 billion during the third quarter of 2019, up 28% over last year — the same year-over-year growth it saw during the second quarter. Total revenue was $17.7 billion for the quarter, up 29% since this time last year. Net income was $6.1 billion, up a billion from the $5.1 billion reported during the third quarter of 2018.
In North America, ad revenue was up 27% at $8.32 billion for the third quarter. The strongest growth came from APAC which saw a 35% increase in ad revenue. Mobile ad revenue accounted for 94% of Facebook’s total ad revenue.
Daily active user growth remains flat. Facebook reports it had 1.62 billion daily active users (DAUs) during the third quarter — up 9% since the third quarter of 2018. There has been little change in DAU growth quarter-to-quarter since this time last year, sticking to a 9% or 8% rise. Far different than the 17% and 18% growth it was seeing during 2016 and 2017.
Monthly active users (MAUs) for the quarter were at 2.45 billion. Facebook’s MAU growth also remains flat at 8% — the same growth rate it reported in the first and second quarter of this year.
Facebook estimates, on average, 2.2 billion people are using at least one of its apps (Facebook, Instagram, WhatsApp and Messenger) at least once a day, and 2.8 billion monthly. The 2.2 billion daily users across its family of apps is a million more than was reported last year.
Why we should care. Even with flat DAU growth, Facebook’s earnings demonstrate advertisers are continuing to spend on the platform. The company also remains confident that Stories Ads are going to help drive further growth.
Facebook COO Sheryl Sandberg accounted a big part of the company’s growth to Stories. She said that three million of Facebook’s seven million advertisers are using Stories Ads on Facebook, Instagram and Messenger.
“We’ve had, I think, a lot of success moving advertisers to where people already are. That’s what happened with mobile ads. People weren’t really doing mobile ads, and we helped them get there,” said Sandberg.