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Facebook cashes in on ads

November 5, 2015

The world's largest social media network says its net profit in the last quarter jumped 11 percent. A surge in advertising revenue has seen Facebook become the second-largest digital ad platform after Google.

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BdT Facebook
Image: picture-alliance/dpa/A. Burgi

Facebook says a spike in mobile users and advertising is behind its strong growth in earnings for the third quarter, with net profits up 11 percent year-on-year to $896 million (824 million euros).

"We had a good quarter and got a lot done," founder and chief executive Mark Zuckerberg said.

The news lifted Facebook shares to an all-time high on Friday, crossing $100 for the first time on Wall Street. It gives the company a market value of some $288 billion.

Facebook had 1.55 billion monthly active users as of September 30, up 14 percent from the year before; about 1.39 billion used the service on mobile devices.

Ad revenue grew 45 percent to $4.3 billion, with three-quarters of that coming from mobile - versus 66 percent a year ago.

Total revenue jumped to $4.5 billion in the third quarter, from $3.20 billion a year earlier.

"Growth is happening across the board and we're of course looking for a lot of growth in the future in emerging markets," Chief Operating Officer Sheryl Sandberg told Reuters. "We're also pretty focused on helping bring the next set of people who are not online, online."

More ads, more dollars

Facebook has seen continued growth in revenue and users over the last three years, but the company is growing more slowly as it increases in size. That's led it to consider new ways of showing advertising.

Facebook's website and its acquisition of the Instagram photo-sharing app, which opened up its platform to all advertisers in the third quarter, account for more than 1 in 5 minutes spent on mobile devices in the United States.

"In the medium to long run, we believe that we're not competing between Facebook and Instagram. We're competing with other forms of media," Sandberg told analysts on a conference call after the earnings report.

More than 800 million people are also using WhatsApp, the messaging app Facebook bought for $19 billion in 2014, and another 700 million people use the Messenger service that Facebook developed internally.

Advertising generates more than 90 per cent of earnings for the company. Facebook has increased the amount of advertising it delivers to its users in order to maximize profits. The company says it is trying to be sensitive with how it delivers ads so as not to alienate and annoy its user base.

jar/jr (Reuters, AP, dpa)