MM events

Crisis? What Crisis? Facebook beats off data scandals to post strong Q1 results

David Murphy

To no-one’s great surprise, Facebook has posted a strong set of results for Q1 2018, despite its recent travails. Q1 revenues came in at $11.97bn (£8.6bn), 50 per cent up year-on-year. All bar £171,000 of this came from advertising and mobile accounted for 91 per cent of those ad revenues, up from 85 per cent a year ago. Profits were up 63 per cent at $4.99bn. It seems advertisers are as hooked on Facebook as its users are.

The #DeleteFacebook campaign also seems to have been a failure. Daily average users for March 2018 numbered 1.45bn, 13 per cent up year-on-year, and 3.5 per cent up on the previous quarter, while monthly average users also rose by 13 per cent to reach 2.2bn at 31 March 2018. Facebook’s headcount increased over the past 12 months by 48 per cent to 27,742 as of 31 March 2018.

Heralding the results, Facebook CEO Mark Zuckerberg said: “Despite facing important challenges, our community continues to grow. More than 2.2bn people now use Facebook every month and more than 1.4bn people use it daily.

"Our focus in 2018 is to keep people safe, and to keep building the experiences people expect from us. We are taking a broader view of our responsibility - to not only give people powerful tools but to make sure these tools are used for good. At the same time, we also need to keep building new services that bring people together in meaningful new ways. That's what makes Facebook so important to so many people, and that's our responsibility too.”

No one in the industry we have heard from seems too surprised by the results. Aaron Goldman, CMO at 4C Insights said: “While recent headlines have called Facebook’s future into question, today’s earnings results clearly demonstrate that investors remain confident in the company. Advertisers also remain confident in the company, as 4C’s data shows that Facebook saw a 62 per cent increase in ad spend through 4C year-over-year in Q1. While Facebook is attending to important privacy and user security issues in the near term, in the long term, brands will continue to focus budgets where they see performance.”

Nick Fletcher, VP at Rakuten Marketing, said the results show that advertisers interested in direct response are making buying decisions based on returns and not headlines surrounding the ‘Facebook is bad for society’ narrative. “Facebook earnings are almost always a positive thing for the company and this latest round is no exception,” said Fletcher. “All the dials are turning in the right way and we’re seeing just enough of the future to keep everyone excited about video and AI. More immediately, changes the company made to its news feed algorithm are only beginning to show their full impact. Over Q2 it will be interesting to see how Facebook markets the prospect of less time spent on the platform per user to its advertisers – it will boil down to really proving its role in an ever-widening path to purchase.

And Yuval Ben-Itzhak, CEO of Socialbakers, said his firm’s data gives no indication that brands are moving away from investing their ad dollars in Facebook or its daughter companies. “With its 2.2bn monthly active users, Facebook is still the place to be for marketers and media publishers,” Ben-Itzhak said. “Over the last year we have seen Instagram emerging as an advertising powerhouse creating significant revenue for Facebook. Social performance data shows that Instagram is the most powerful platform for brands. With some uncertainty around Facebook’s future earnings, Instagram’s importance this quarter and in the future, cannot be underestimated.

“Looking at Socialbakers’ data, we believe that ad spend on the platform has remained stable. Over 2017 we saw ad spend trending steadily upwards, then an expected spike around New Year and the drop after is normal seasonality for AdTech. The chart does show a small hiccup after the day the Cambridge Analytica story broke, but a return to "business as usual" a few days after.

“This is a typical pattern, as can be seen after a big data breach as a result of cybercrime. All in all, we can say that there is a big gap between media reporting on the #DeleteFacebook movement and reality when it comes to brands, who seem to be as active as ever.”