Over the last year Facebook has taken several aggressive steps that link brands to consumers in order to further promote online shopping while on the social network.
Facebook’s efforts include include tighter integration with backend ecommerce platforms, a rise in sponsored content that is displayed, more video advertising, the ability to shop directly from within its Messenger app, and more.
This push seems to be paying off as FaceBook’s earnings report for Q1, which came out last week, show strong results.
- Revenue in the three months ended in March rose 52 percent to $5.382 billion, beating analyst predictions of $5.26 billion.
- Ad revenue for the quarter was up 57 percent year-over-year.
- Facebook’s average price per ad increased 5 percent
- Ad impressions increased 50 percent.
- Eighty-two percent of advertising revenue in the first quarter came from mobile.
- Facebook is expected to account for about 12 percent of the $186.81 billion global digital advertising market in 2016, according to research firm eMarketer.
- Pivotal Research estimates Facebook will capture 47 percent of global digital advertising growth and 43 percent of all advertising growth outside of China in 2016.
Continued User Growth
In the months prior to the release of the earnings report, some industry watchers feared that Facebook could lose ground based on damning report published by The Information revealing that Facebook has been struggling to reverse a 21 percent decline in “original sharing,” or personal updates, from its 1.6 billion monthly active users. Many worried that the recent rise in branded content from companies rather than individuals may be at the expense of Facebook’s core users.
The theory was that although FaceBook seems to be an essential platform for keeping up with friends and family and the first place for people to share important personal news – . like engagement announcements, baby photos, and vacation photos – if less people are sharing personal information that could mean user interaction might dip. Of course, advertising revenue depends on ROI and if the users aren’t engaging, then advertisers might find the platform less valuable, thus spending less with FaceBook.
But Facebook’s numbers for Q1 don’t seem to bear that out. Facebook’s monthly active users are up as are daily active users – both are key indicators of the company’s growth.
Mobile Leads the Way
The company reported that for Q1, monthly active users were 1.65 billion, up 16 percent from the 1.62 billion expected. Daily active users were 1.09 billion on average for March 2016. This quarter, 66 percent of Facebook’s monthly active users also were daily active users, which is up from 65 percent during the same period last year.
Facebook also once again proved that its mobile business is thriving. It had 1.51 billion mobile monthly active users, up 21 percent year-over-year, and the company made 82 percent of its advertising revenue from mobile this quarter, versus 73 percent at this time last year.
Video is a Big Deal
Along with strong growth across the board on those key numbers, Facebook has been showing its 1.65 billion users videos that play automatically and it has introduced more advertising on photo-sharing service Instagram. In a statement, Facebook COO Sheryl Sandberg said that people are sharing and creating three times as much more video on the social network year-over-year, and that they’re watching 40 percent more on Instagram in the last six months.
Links to eCommerce
Last month, at F8, its annual developer’s conference, FaceBook announced Bots for Messenger to enable users to shop through the communication app. This means that consumers can interact with brands and order goods and services, and that they will also see ads while using Messenger.
FaceBook has also committed to shopping by offering tighter integration with ecommerce platforms, including BigCommerce, which expanded the availability of the Shop section on Facebook Pages. This enables merchants to create a custom Shop on their business Facebook Page. Sellers who use BigCommerce can begin merchandising individual products or custom collections to Facebook users; BigCommerce claims that nearly 50 percent of people visit FaceBook actively looking for products.
BigCommerce merchants can upload and manage their product catalog in Facebook’s Business Manager control panel – and they can then create collections to boost “discoverability” based on users’ interests.
Shoppers can also subscribe to merchants’ updates when new items are added and can purchase them through the business’ online store.
It seems that marketers also believe that Facebook provides the biggest bang for their buck. According to eMarketer, Social Fresh, Firebrand Group and Simply Measured surveyed 551 social media marketers worldwide and asked them to choose up to three social media platforms that they thought produced the best ROI. Almost all (95.8 percent) of social media marketers worldwide said Facebook did.
The bottom line is that Facebook wants a bigger slice of online shopping pie, which is expected to grow nearly 57 percent to $530 billion online by 2020 according to Forrester Research. Forrester estimates that Amazon already has a whopping 60 percent of that market. FaceBook is also looking to continue to gain revenue from retailers looking to advertise and engage with users, while hopefully getting users of the social network to spend even more time and money while on the platform.
I fully expect FaceBook to continue its shopping push and roll out even more features that encourage and promote shopping in the near future.