In its earnings report, Facebook also said that the strong revenue growth seen at the end of last year could be hard to replicate. The social network company said it expects slower revenue growth in the third and fourth quarters, and Apple expects its global advertising business to slow dramatically since the early days of the pandemic. But the company recovered quickly, posting strong sales and profits in the second half of the year.
Facebook also pledged on Wednesday to accelerate spending on investments, including technical products, talent and consumer hardware. Facebook said total spending for the year would be between $70 billion and $73 billion, up from $60 billion last year.
Facebook sued Apple last week after iPhone app developers began asking users for permission to collect certain data for ads. Facebook said Wednesday that it expects the changes in data protection to impact the second quarter and that revenue growth in the third and fourth quarters could slow in the previous quarter.
Facebook said the changes would hurt its business and hurt smaller businesses that rely on personalized advertising. The research firm blamed the expected decline in ad revenue in a year when spending on digital advertising in the country is expected to rise by nearly 19% to $107 billion. Amazon.com Inc. (AMZN) and increasing competition from Google Inc. (GOOG). Facebook’s dominance of the US digital advertising market is slowly beginning to crumble.
Google and Facebook, known as a digital duopoly and its stronghold of advertisers, will view the loss of market share as a blow, as they continue to comfortably pocket half of the country’s marketing dollars.
The two companies have continued to significantly increase their total ad revenue, despite criticism that their websites have unfairly interfered in political elections and been littered with fake news. Together, they account for more than half of the US advertising market, and, despite coming under criticism for unfair interference in a political election and for their website’s glut of “fake news,” they both continue to grow significantly. Looking ahead, the world’s largest social network said it would focus on building e-commerce capabilities to expand its reach. Facebook’s 48% jump in sales is being helped by an increase in the number of consumers shopping online, from 30% last year to 40% this year.
Total revenue, which consists mainly of ad sales, rose 48% to $26.17 billion in the first quarter ended March 31, beating analysts’ expectations of $25.8 billion, according to Thomson Reuters I / B / E / S.
Facebook Inc’s mobile ad revenue grew faster than expected, helping to drive first-quarter earnings per share up nearly 13 percent. Facebook said Tuesday it gets 14 percent of its advertising revenue from mobile ads, which is intended to reassure investors that the social network is beginning to figure out how to make money with users of smartphones and tablets. Zuckerberg said the company plans to focus on building a new business model for content creators and helping them make money on Facebook’s platform.
Mobile ad revenue in the first quarter was estimated at $40 million to $50 million, up from an estimate of $35 million a year ago. Advertising revenue, which accounts for the bulk of Facebook’s total revenue, rose 46% year-on-year to about $25.440 million.
The company’s profits nearly doubled and the stock rose more than 5% on Wednesday as total profits and profits beat Wall Street forecasts.
Shares rose 16% by the close of trading on Wednesday, compared with a 3.5% decline in the S & P 500 stock index, according to Thomson Reuters I / B / E / S.
In its earnings report, Facebook also said that strong revenue growth late last year could be hard to replicate. The global advertising business slowed dramatically in the early days of the pandemic, but recovered quickly, posting strong revenues and profits both in the second half of 2020 and beyond. But the social network company said it expected slower revenue growth in the third and fourth quarters.
Facebook Chief Financial Officer David Ebersman said the company would continue to invest aggressively in the fourth quarter, but without giving a specific financial outlook, as has been the case in the past. Facebook also pledged on Wednesday to accelerate its spending on investments, including technical products, talent and consumer hardware.
Ebersman said the number of ads delivered by Facebook in the third quarter was up 27 percent year-over-year, and the average price of those ads was up 7 percent. Facebook said that about half of that revenue came from mobile ads, suggesting that mobile ad revenue totaled $45 million in the second quarter. Third-quarter mobile revenue marked a more than 50 percent increase from the second quarter, when it said it generated more than $1 million a day from ads that appeared in users “news feeds.
