Higher-priced ads help Facebook record a net revenue of $26.17 billion in the first quarter of 2021. This corresponded with a 48% increase from net revenue the previous year; the company attributed this to a 30% increase in average price per ad and 12% increase in number of ads delivered overall.
However, Facebook doesn’t expect things to remain rosy forever. CFO Dave Wehner said in the company’s earnings release for Q1 2021 that the company expects “increased ad targeting headwinds” from regulatory and platform changes. More specifically, Facebook expects immediate impact from Apple’s recently launched iOS 14.5, which requires apps to proactively seek user consent to being tracked for advertising.
COO Sheryl Sandberg, in a call with investors, said the company has been putting in a huge amount of work to prepare for Apple’s API changes. “We’re working with our customers to implement Apple’s API and our own Aggregated Events Measurement API to mitigate the impact of the iOS14 changes. We’re rebuilding meaningful elements of our ad tech so that our system continues to perform when we have access to less data in the future.”
Sandberg said that it is also working on long term engagement with industry bodies like W3C for privacy-oriented technologies that can allow personalised ads, while simultaneously limiting access to people’s information.
Throughout the investor call Facebook emphasised on the supposed importance of personalised ads for small- and medium-sized businesses, since they only want to target a specific demographic and not everyone in general. Sandberg said, “Small businesses don’t have to understand the alphabet soup of acronyms they’ll need to comply with, but they do need to have confidence that they can still use our tools to reach the people who want to buy what they’re selling in a privacy-safe way.”
Wehner, too, claimed that Facebook was “concerned about the impact this update is going to have on the ability of small businesses to use their advertising budgets effectively”.
On regulators, though the Facebook leadership didn’t comment on anything in specific, spoke of uncertainty of transatlantic data transfers in light of recent European regulatory developments. “[W]e are closely monitoring the potential impact on our European operations as these developments progress,” said Wehner. He was likely referring to the Digital Services Act (DSA) and Digital Markets Act (DMA), which propose a significant overhaul of data protection laws in the EU.
How will change to algorithms affect Facebook? An investor asked the company about algorithmic amplification — when certain types content (often controversial) is surfaced to users to maximise amplification. The subject was discussed in recent hearings from social media companies held by the US legislature. “[I]f you guys were forced to maybe change up the way all these algorithms work, what might — what kind of impact will that actually have on engagement?” the investor asked.
CEO Mark Zuckerberg said that this narrative was “dramatically overstated by critics”. “We do not optimise our systems to increase the amount of time spent in News Feed. I explicitly do not give our News Feed team or the Instagram feed team goals around time spend.” He added that Facebook aimed to reduce the spread of extremist content and indicated that the company’s “robust” practices will easily live to regulator scrutiny.
But, crucially, Zuckerberg admitted that the company’s messaging on this subject might not have been very effective. “I don’t actually think that this kind of narrative about the company is accurate. And we’ve tried hard to dispel it. I don’t think we’ve been super successful at that. We will continue trying to work on that.”
- Carts on WhatsApp have been used to send orders more than 5 million times
- Facebook continues to bet big on VR and AR, with heavy investments in its Quest 2 project.
- Facebook Shops, a product launched in May 2020 for small businesses, has more than 1 million monthly active shops, and over 250 million monthly Shops visitors
- WhatsApp Business becoming more popular, with more than 100 million messages per day. “Click-to-WhatsApp” ads have more than 1 million users.
- WhatsApp Business users will soon be given the option to buy ads within the app itself.
Operational and financial numbers:
- Daily active users (DAUs): 1.88 billion
- Monthly active users (MAUs): 2.85 billion
- Average revenue per users (ARPU): $9.27
- Earnings per share: $3.30 (up 93% YoY)
- Total revenue: $26.17 billion (up 48% YoY)
- Net income: $9.5 billion (up 94% YoY)
***Correction (4:20 PM, April 29): The results correspond with the first quarter of 2021, and not Q4 of 2020, as the previous version of the story had incorrectly stated. This has been amended. Originally published at 12:57 PM, April 29.