Here’s How Facebook Is Using Its Creative Shop Team To Drive Advertising Revenues

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Recently, Facebook (NASDAQ:FB), in partnership with the WPP group, launched a Creative Ambassador program for latter’s creative agencies in India, which is aimed at training creative agencies in a scaled manner to create mobile first advertisement for their clients, leveraging Facebook’s creative tools. This program was launched in Asia Pacific last year and was rolled out in Hong Kong and Singapore before India. Facebook’s Creative Shop team is one of the key constituents of this program, which encourages agencies to leverage Facebook’s targeting tools and personalized marketing in their work. Facebook Creative Shop is a specialized division which is dedicated to help marketers and brands to be more creative in their campaigns and to increase the impact of their advertising. This is an attempt by the social media giant to increase the return on investment (ROI) from Facebook advertising for marketers which can drive advertising revenues for the company. This effort has shown significant results for small and medium enterprises (SMEs) who form a substantial portion of advertisers on Facebook. The workshops offered by Facebook for these enterprises train them on using stop motion videos, adding moving graphics to still shots and cutting together appealing product videos. After using these new marketing tools as opposed to still images for advertising on Facebook, these enterprises have seen a substantial increase in sales. Facebook is now looking to encourage creative agencies to use these tools and create more compelling ads for its platform, through its Creative Ambassador program.

See our complete analysis for Facebook

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According to our estimates, the Core Facebook Advertising segment accounts for 70% of the company’s valuation and we expect Facebook’s international advertising ARPU (average revenue per user) to increase from $9.65 in 2017 to nearly $18.50 by the end of our forecast period.

Similarly, we expect Facebook’s U.S. and Canada advertising ARPU to increase from $68 in 2017 to $91 by the end of our forecast period.

In the first nine months of 2016, Facebook’s advertising revenue grew 60%, driven by growth in mobile ad revenues across geographies. The company’s management is expecting advertising growth to come down meaningfully in 2017 as it focuses on keeping ad impressions at sustainable levels. The next wave of ad revenue growth for the company is likely to come from price per ad and subscriber growth. Efforts to increase ROI on advertisement (such as the one with its Creative Shop team) can help Facebook justify its higher price per ad in the long term. Furthermore, as the company works on innovative tools for advertisers to better connect with their audiences, programs to explain the uses of these tools can ensure that they are appropriately leveraged by the marketers.

We believe Facebook’s creative shop team can play a significant role in training marketers to create advertisement leading to higher return on investment. This can in turn drive advertising revenues for the company.

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