Global ad spend to slow but Facebook revenue beats expectations

Rosie Baker
By Rosie Baker | 3 November 2016
Mark Zuckerberg.

Facebook has today reported US$7.01 billion in revenue for quarter three, beating analysts expectations of how much money it can make from advertising. Of the total revenue, $6bn came from advertising, marking a 59% year on year increase.

Mobile accounted for 84% of Facebook's ad revenue in the quarter, up from 78% a year before.
The site is also claiming a 17% rise in daily active users to 1.8 billion people logging in to the site on a daily basis, 1.1 billion of those doing so on mobile.

Profit is also up at the social network – 160% up – year on year.

Facebook's Q3 financial update comes as Warc releases its global ad spend forecast for 2017 – and it's not looking as great as Facebook's report card.

Warc's numbers show global ad spend will slow down next year, to 4.2%, down from 4.5% in 2016. In September Zenith upgraded its global forecast following stronger than expected ad spend in the US.

Australia's ad spend growth is sitting below the global figure at 3.8%, but it will remain flat next year, according to the forecast.

All major mainstream media channels are expected to record growth in 2017 – with the exception of magazines and newspapers.

TV is expected to see growth of 1.1% globally, while online advertising is well into the double digits with 13% growth expected, although both register a slow down.

Mobile too, will see a slowdown in growth, but it is still expected to be the fasted-growing channel in 2017 with 34% growth forecast.

Eight of the 13 markets coovered will see softer growth rates in 2017.

India is the fasted growing market with 13% ad spend growth expected, while the US market is seeing a boost from election spending and the Olympics resulting in a 5.1% growth in 2016, which will soften to 2.8% growth in 2017.

Brexit does not appear to be having a major impact on ad spending in the UK with above global average growth expected this year and into 2017, although it is expected to dip from 5.6% growth to 4.8%.

James McDonald, senior research analyst at Warc, says: "The latest consensus results present a positive outlook for advertising investment at both a global and local level. All 13 markets studied are expected to record ad spend growth in the short term, and this despite their contrasting socio-economic environments.

"We have identified a common trend among more mature markets whereby increasing investment in internet - particularly mobile - ad formats is driving headline growth. Applying consensus trends to Warc's adspend data shows that mobile will grow to be the world's third-largest ad channel by the end of 2016."

Warc bases its Consensus Ad Forecast on a weighted average of ad spend predictions at current prices from ad agencies, media monitoring companies, analysts, Warc's own team and other industry bodies.

Sources include Carat, eMarketer, GroupM, IPG Mediabrands' Magna Global, Nikkei Advertising Research Institute (NARI), Pitch-Madison, Pivotal Research Group and ZenithOptimedia.

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