Facebook reported strong first quarter ad revenue growth but flagged that the rest of this year would look less impressive.
That is due to the timing of the News Feed ad ramp up last year. CFO David Ebersman, who is to step down later this year, said overall year on year comparables “will get more challenging from here and decline for the rest of 2014.” He said that Facebook was still in the early stages of building out its ads business “and remains optimistic over the long term”.
Mobile ad revenue was USD1.3bn for the first quarter, an increase of around 30%. In the first quarter the average price per ad displayed more than doubled (up 118%) he said, while total ad impressions declined 17% due to factors including the continued shift to mobile, where people are shown less ads than on desktop.
“The increase in average price per ad was primarily driven by a shift [towards] more ads being shown in News Feed which have higher engagement and prices than [desktop] right hand column ads,” said Ebersman. “So a higher proportion of ads being shown in News Feed drives up the overall average price per ad.”
Ebersman said Facebook did “not have a perfect measure” for the split between brand versus direct response ads because advertisers don't have to specify that when using the system.
CEO Mark Zuckerberg said that the declining total number of ad impressions “might continue”.
Away from the main Facebook product, Zuckerberg said that the next batch of products from Creative Labs, such as Paper, remained at an early stage. The idea was to grow them out to around 100 million users, iterate, and then expand. Paper, he said, “would be a good test case” with Facebook planning to rapidly launch new products.
Of the proposed WhatsApp acquisition, Zuckerberg hoped that the messaging service would “be as ubiquitous as Facebook one day... but more on that when the deal closes.”
COO Sheryl Sandberg said that video, driven by consumer behaviour and smartphone evolution “was a big opportunity” with “a lot more video going through News Feed.”
She said the recently launched click to play video ad product sold on both a CPM and CPC basis was “going really well... and we have also been in early conversations with some clients about a CPM autoplay video ad.”
Before launching an autoplay video ad product, Sandberg said “we want to see autoplay video be something that is pretty common in the News Feed … before we push very hard in the ads business.”
She said video ads were a “premium product.... but we won't see a material contribution from it this year.”
Total Q1 revenues stood at USD2.5bn up 72%, total ad revenue was USD2.27bn, up 82%. David Wehner will succeed David Ebersman as CFO.
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