Facebook Has 68% of Social Ad Spending... and That's Just for Starters

WebProNewsAdvertising

Share this Post

Screen Shot 2016-07-25 at 11.25.15 AM

According to research by eMarketer, Facebook will receive 67.9% of all social media advertising revenue in 2016. The study predicts that Facebook will generate $22.37 billion in net ad revenues this year, up 30% from 2015 revenue of $17.08 billion. eMarketer says that 70% of this years revenue ($12.08 billion) will come from outside of the US.

"Facebook is seeing momentum across its ad business,” said eMarketer principal analyst Debra Aho Williamson. "On the branding side, video ads are becoming more and more popular for marketers whose objective is broad awareness. And products like Dynamic Ads, which let advertisers upload their product catalog to Facebook and then deliver relevant targeted ads, are proving highly effective for marketers that want to drive lower-funnel activities, such as purchases."

Screen Shot 2016-07-25 at 10.37.46 AM

eMarketer notes that this revenue growth is due entirely to ads on Facebook itself and that Facebook has not yet added monetization to Messenger, which it has been transitioning to a stand-alone app for the last couple of years. In June, Facebook announced that they mobile users would soon not be able to use Facebook Messenger without downloading the separate Messenger app.

Just last week, Facebook announced that Messenger is now being used by over 1 billion people, which matches the number of users that WhatsApp had as of February 2016, according to Statista.

"Messenger is gaining traction among marketers that want to experiment with chat bots,” said Williamson. "These are very early days for conducting business activities on Messenger, however, and it remains unclear just how important it will be as a marketing vehicle."

Facebook has also not brought serious monetization to WhatsApp, which it purchased for $22 billion in 2014, or to Instagram, which it paid $1 billion for in 2012.

It's very likely that once Facebook finds a way to monetize WhatsApp, Messenger, and Instagram their social revenues will significantly accelerate.

Another significant source of future ad revenue for Facebook are video ads, which Facebook may actually see as its future primary source of revenue. At Fortune‘s Most Powerful Women International Summit in London this past June, Nicola Mendelsohn, VP EMEA at Facebook, predicted that the Facebook newsfeed will be all video in 5 years. "It will definitely be mobile. It will probably be all video," Mendelsohn said. "I just think if we look, we already are seeing a year on year decline in text. We're seeing a massive increase as I've said on both pictures and video. So yeah, if I was having a bet, I would say video, video, video."

Mark Zuckerberg recently conducted the first live video conversation with ALL Facebook users. "A few weeks ago I started off trying to do an internal live Q&A and I found it was so much more fun and engaging and I could see peoples comments as I was going," Zuckerberg told millions that were live watching. "So rather than just having a few hundred or a few thousand people in a room we could do this here and we could have tens or hundreds of thousands of people participating in a town hall Q&A together all across the world."

Facebook knows that video is remarkably effective for brand marketing. Remember the Chewbacca Mom video? Well, you might not remember that was originally a Facebook Live video and benefited Kohl's immensely. Facebook and all of its social and messaging platforms are ripe for video advertising, and when Facebook goes all in with video, even TV networks won't be able to compete with both its reach and its ability to micro target audiences.

WebProNews
WebProNews | Breaking eBusiness News Your source for investigative ebusiness reporting and breaking news.