Facebook is a powerful advertising platform

By January 29, 2015Advertising, Facebook

FacebookARPU

You can see from the charts above (originally on Techrunch) that Facebook is getting stronger and stronger as an advertising platform. So long as advertisers are spending rationally, which is a good first order assumption, then if ARPUs are rising then ads are becoming more effective.

Perhaps unsurprisingly, none of this is happening by accident. Facebook has been improving ad measurement, improving app speed, and pushing video to increase time-on-site. And that’s just what I read about today.

We see this amongst our partner companies too, many of which are now finding Facebook a much better platform than Google. That’s particularly true for those selling a novel product or service – people don’t know they want it so they aren’t searching for it, but well targeted ads Facebook can excite demand.

  • http://captainkinnard.com/ Ben Kinnard

    I find the 3x difference in revenue between North America and Europe surprising – I would have thought the ga would be much narrower. Is this Eastern Europe dragging the average down, or better/deeper advertising penetration in the US (or something else)?

  • Stuart Brameld

    Great point re using Facebook for more novel products and services. Just read an interesting article on Facebook advertising http://adage.com/article/digital/facebook-s-mobile-revenue-hits-2-5-billion-prices-soar/296869.

  • http://www.troglo.net Henning Moe

    I suspect the ARPU growth is in part a result of internal changes at Facebook (in post selection algorithms and more), combined with its already proven effectiveness as a social media platform. Your first order assumption about rational behaviour is correct; but increased ARPU in this case doesn’t directly imply that ads are becoming more effective.

  • http://www.theequitykicker.com brisbourne

    Great link! Thanks Stuart.

  • andrewjude

    I’m a professional advertiser and Facebook are just crushing it. Over 2 million advertisers use the platform, clients are asking me if I should drop other media owners off media plan for campaigns or reduce ad dollars. They ship new ad products or features almost on a weekly / bi-weekly basis that are actually so useful that all clients are excited to try them first. I cannot say the same with other media owners sadly.

    I’m willing to bet in five years time $FB will be close to $GOOG in terms of market cap.

  • http://www.theequitykicker.com brisbourne

    Interesting. Thanks Andrew. Facebook’s biggest challenge in growing to Google scale is growing their audience. Their monetisation is amazing, but ARPU can only go so far. Staying relevant in an age of incredibly rapid change in consumer preferences isn’t easy – either organically or via acquisition. It will be interesting to watch.