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Mark Zuckerberg and Sheryl Sandberg, Facebook’s top two executives, talked about a grand vision for Facebook advertising during the quarterly earnings call Wednesday. The goal, each stressed, is to make people like ads as much as any other piece of content.
That’s a lofty — some would say impossible — quest. But the journey might sound good to marketers hoping to ride the coattails of the social network’s rapid growth. It announced a new high of 1.28 billion monthly active users, including 1 billion mobile users, revenue of $2.5 billion and nearly a tripling of profit in the first quarter.
The revenue growth is fueled by advertising revenue, which increased 82% compared to the first quarter of 2013, Facebook’s biggest year-over-year growth in nearly three years.
No doubt some of that growth was fueled by marketers who have seen plunging organic reach for Facebook Pages, but Zuckerberg and Sandberg credited ads that are better targeted, more effective and measured better. And because of that, they asserted, more palatable to consumers.
“Our goal is to make our ads as interesting and valuable as the organic content that you find on Facebook,” said Zuckerberg, Facebook’s founder and CEO, “to have more people find ads useful so businesses can engage effectively with our community and grow. Our most recent data shows that this approach is working well and we continue to be really encouraged with the feedback we are seeing from people about our ads.”
Said Sandberg, the chief operating officer: “The data suggests that the ads are getting more relevant but there’s a long way to go. Our goal is that every time you open News Feed, every time you look at Facebook, you see something — whether it’s from consumers or whether it’s from marketers — that really delights you, that you are genuinely happy to see.
“I think we hit that more than we used to with our ads. But the truth is we have a long way to go to hit that bar and that’s the bar we are striving for.”
More interesting takeaways from the call:
Everyday People
Zuckerberg said 63% of Facebook’s users visit the site daily, and 55% of daily active users only visit on mobile. Also 50% of users log into the network six out of seven days a week.
Targeting
Ten times more marketers, Sandberg said, are using the Custom Audiences targeting feature than were using it this time last year. One successful example, she said, was an effort by Ben & Jerry’s to sell more of its classic flavors.
Using Custom Audiences and Partner Categories, another targeting feature, to target premium ice cream buyers, the company reached 14 million people — 90% on mobile — and increased sales by 8.1%.
And such targeting tools, previously only available to Facebook’s biggest advertisers, have been added to the self-service ad creation pages.
Facebook also will be using the new Nearby Friends location feature for ad targeting, Sandberg said: “We use info like this to enhance all the services we provide including relevant ads.”
Sandberg said there’s heavy demand for Instagram ads, citing a campaign by Levis — “basically people wearing denim in beautiful outdoor spaces” — that targeted people 18-34 years old, reached 7 million and produced a 25 point lift in ad recall (three times higher than a control group).
Sandberg said, however, that Facebook plans to take it slow with ads on Instagram, focusing more on adding to the 200+ million user base.
Zuckerberg said Instagram is “a few years away from being an important business” for Facebook.
Sandberg also said Facebook was moving deliberately on premium video ads and a test of a mobile ad network, which she confirmed for the first time Wednesday.
The Digital Shift
Sport Chek, a Canadian sporting goods retailer, pulled its paper circulars, the primary advertising method it has used for 92 years, for a two-week test of only online advertising, the majority on Facebook. During the test, Sandberg said, in-store sales grew 12% year-over-year and sales of items promoted on Facebook grew 23%. The company now aims to shift 25% of its spending on print advertising to Facebook in the next year.
To Sandberg, that shows the power of Facebook’s measuring tools, their ability to prove higher return on investment. As consumer attention shifts — she said the average U.S. consumer now spends 5¾ hours a day on digital devices and 4½ hours on television — Facebook is getting better at making that case.
“Marketers are looking for the highest ROI they can find,” she said, “and they should be considering us and everybody else. And they should be doing this not just across digital but across print, across radio, across TV, across any other vehicle.
“We say to our clients all around the world, we want to earn your business. We want them to compare us to other investments they could make to see who can draw the most value to their bottom line. That’s what we are focused on and that goes way beyond digital.”
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