Facebook ad revenues up year-on-year despite data and privacy scandals

Social media giant posts its Q1 quarterly earnings, reporting advertising revenues of US$11.79 billion globally

Facebook has seen advertising revenues leap 50 per cent year-on-year to US$11.79 billion, although dip compared to Q4, as it battles ongoing media, political and legal scrutiny around consumer data and privacy practices.

The social networking giant released its quarterly earnings to 31 March 2018 today, showing reporting total advertising revenue of $11.79 billion. This was 50 per cent up on the $7.85 billion reported in Q1, 2017, but was a drop of $984 million on Q4, 2017. Payments and other fees for the quarter totalled $171 million.

Of this, mobile advertising revenue represented 91 per cent of total revenue during the first quarter, up 6 per cent from Q2, 2017. Asia-Pacific as a region generated just over $2 billion of these revenues, against Facebook’s largest market, the US and Canada ($5.67 billion).

Offsetting the revenue was capital expenditure of $2.81 billion. Facebook has 27,742 employees, up 48 per cent from last year. Facebook also outlined average revenue per user was up from $4.14 globally in Q1, 2017 to $5.45 in Q1, 2018. However again, this was a fall on Q4 figures ($6.08).

Facebook also reported daily active users reached 1.45 billion on average for March 2018, an increase of 13 per cent year-on-year, while monthly active users were 2.2 billion on 31 March, again a 13 per cent increase year-on-year.

Facebook CEO, Mark Zuckerberg, said the results reflected ongoing support for the group, even as it faces significant criticism for its handling of consumer privacy and data.

“Despite facing important challenges, our community and business are off to a strong start in 2018,” he stated. “We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together.”

Zuckerberg also reiterated some of the comments made during his recent testimony to the US senate committee, where Facebook was accused of failing to protect the privacy of millions of users, specifically relating to the Cambridge Analytica data leak and Russian interference in the US presidential elections in 2016.

Earlier this month, it was revealed more than 310,000 Australians had their social data improperly shared with Cambridge Analytica, out of a total of about 87 million people.

“It’s clear now we didn’t do enough to prevent these tools from being used for harm as well  - whether it’s foreign interference in elections, fake news, hate speech or app developers and data privacy,” Zuckerberg stated.

“So we are now going through every part of our relationship with people and making sure we’re taking a broad enough view of our responsibility – not just to build tools, but to make sure those tools are used for good. This means continuing to invest heavily in safety, security and privacy.”

Steps outlined by Zuckerberg to address these areas include restricting the data developers can access; building more artificial intelligence tools to detect and remove fake accounts ahead of elections in both the US and Europe last year, and doubling the headcount working on security and content review to more than 20,000 by the end of this year. It’s also rolling out ad transparency tools giving users the ability to see who is running a political ad, who they’re targeting, how much they’re paying and what other messages they’re sending out.

In addition, in recent weeks, Facebook announced it would require everyone running political and issue-based advertising to be verified with government identification.

During the presentation to investors, Facebook COO, Sheryl Sandberg, also detailed focus on privacy protections into ad systems, stressing the anonymising of consumer data to protect privacy.

“In the coming months, GDPR will give us another opportunity to make sure people fully understand how their information is used by our services,” she stated, pointing to Facebook’s decision to extend these controls to everyone using the platform globally.

Facebook’s growing ad reach

Yet despite the challenges, Facebook’s extensive role in advertising strategies was made apparent in the quarterly results.

During her remarks, Sandberg highlighted Facebook’s role as part of wider omni-channel marketing strategies and by way of example, noted more than 90 per cent of national US TV advertisers advertised on Facebook during the recent Super Bowl game.

“Take Tourism Australia. To get more Americans interested in visiting Australia, they ran ads on Facebook and Instagram in the week leading up to the game,” Sandberg said. “On Super Bowl Sunday, they ran short video ads on Facebook before their big TV spot at halftime. This drove 22 per cent incremental reach on top of TV and a 35-point lift in awareness. During the campaign, 50 per cent of leads on the Tourism Australia site came from Facebook.”

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