A 50% Increase In Active Advertisers In A Year: Can Facebook Sustain This Growth?

FB: Facebook logo
FB
Facebook

Facebook (NASDAQ:FB) recently announced that it now has 3 million active advertisers – 50% higher than the 2 million number reported by the company last year.  A vast majority of these advertisers are small businesses and 70 percent of them are outside the U.S. In Q4 2015 the company’s advertising revenue grew by 57% on the back of a healthy increase in user engagement and user base. The company had 50 million active business pages on its platform as of December 2015 and active advertisers comprise only 6% of these pages, indicating the growth potential. Because Facebook provides additional features and and targeted advertising tools to businesses that use its platform, the company is able to generate strong growth in these key metrics.  With a growing and engaged user base, there is strong growth potential for social media advertising.

.See our complete analysis for Facebook

International Market Has Huge Growth Potential

Relevant Articles
  1. Beating S&P500 BY 11% YTD, What To Expect From Travelers Stock?
  2. Up 50% Over The Last 12 Months, Is Hyatt Stock Still Attractive?
  3. Capital One Stock Gained 44% In The Last 6 Months, What’s Next?
  4. Up 8% Year To Date As 5G Gains Traction, What’s Next For Verizon Stock?
  5. Up 32% In The Last 12 Months, Where Is BNY Mellon Stock Headed?
  6. Rallying 30% YTD, What’s Spurring The Rally In Applied Materials’ Stock?

According to eMarketer, social network ad spending is expected to reach $36 billion by 2017, representing 16% of the total digital ad spending. Facebook dominates this market by accounting for more than 65% of the total social network ad spending worldwide. Small businesses are making a significant contribution to Facebook’s advertising revenue and the company is working on ways to attract more businesses to its platform. In 2015 Facebook added several features to allow page owners to manage communication with customers on their page. This includes the ability to add average time taken to respond to a customer, an easier way to respond and keep track of comments and redesigned inboxes to enable businesses serve their customers better. Facebook has a Page Manager app which allows businesses to manage their pages via mobile devices and create ads directly through these devices.  Moreover these tools are being actively used by small businesses.  Given its high penetration in the U.S., with nearly 50% of Americans using Facebook regularly, the company believes that there is still room for growth as 35% of small businesses in the U.S. do not have an online presence.  This number will be much higher in international markets such as India where internet penetration much lower. Growth in these economies and increases in internet penetration offer huge potential for Facebook.

As per our estimates Facebook’s international advertising average revenue per user outside the U.S. will increase steadily  over our forecast period from around $8 in 2016 to more than double at $17 by the end of our forecast period.]

With more than 1.5 billion users globally, Facebook is undoubtedly the leading social media platform, attracting the highest number of social network advertisers. As advertising in this space gains momentum, the company should see high growth in its advertising revenues. Facebook constantly innovates to provide advertisers with a higher return on their investment. Given the presence of businesses on Facebook that are not yet actively advertising on its platform, the is great potential  for high growth in its advertisers in the years to come.

Read More

How Do Facebook and Twitter Compare In Terms Of Users, Advertisers And Ad Revenues ?

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology