Zuckerberg ready for his closeup: Facebook's video efforts taking off
The social-networking giant says advertising revenue continues to rise, as does the number of active users. One of the key drivers of growth, executives said Wednesday, is video.
Lights, action, Facebook!
The world's largest social network isn't just a place where people chat with friends, share news stories and look at baby photos. It's increasingly becoming a center for video -- be it uploads of friends dunking buckets of ice on their heads or advertisements from McDonald's reenacting futbol games with french fries.
The result: Facebook has quickly become one of the Web's most popular places for watching video. Users view more than 4 billion videos a day, according to the company. That matches the latest estimates available for Google's powerhouse YouTube. Even better for Facebook, at least 75 percent of that viewership takes place on advertisers' preferred platform: mobile devices. A recent survey found 9 out of 10 US advertising executives said they plan to run a video ad on Facebook this year, beating out YouTube and Twitter, among others.
"There's this continued progression of people getting richer and richer ways to share what's on their mind," said Facebook co-founder and CEO Mark Zuckerberg. Speaking on a conference call with analysts discussing the company's financial results Wednesday, he said that in the past ten years, people have moved from communicating by text to photos. Now, it's becoming video. "We're seeing huge growth there," he said.
But that's not just it, Zuckerberg said. Immersive 3D video will also become key, which is why Facebook is investing in its Oculus virtual-reality goggle technology.
Facebook's executives noted that the ease at which businesses can shoot video on a mobile device, upload it, and then give it even extra juice to get in front of users by paying for an ad, makes it particularly compelling. The company has been steadily expanding options for advertisers as well, including ways to show ads on other programs, like Instagram, and help users buy items more easily from within Facebook.
While there are many different types of ads, the company's executives said video in particular has become one of the most popular types of posts on its site this year. That's boosted Facebook's business, said Dave Wehner, the company's finance chief.
"It's making a real contribution on engagement and revenue," he told CNBC in an interview Wednesday. "We're very excited about the video ad product, and it's making a real contribution."
Facebook's surprising command in video could signal another period of growth for the social media giant. The company has so far been able to jump from strength to strength -- building a strong advertising business on desktop and laptop computers, then repeating that success on mobile devices.
Last year, Facebook accounted for more than 18 percent of global advertising spent on mobile devices, according to industry researcher eMarketer. In contrast, revenue from mobile advertising was negligible in 2012 when the company went public in 2012. While Google still dominates advertisers' dollars, accounting for twice the amount spent on Facebook, video could start making a difference.
By the numbers
Mobile devices will continue to be key to Facebook's success. The company Wednesday said 76 percent of advertising revenue came from mobile devices for its second quarter. That's up from 73 percent in April, and 62 percent the same time a year ago. Facebook doesn't say how much money it makes from advertising overall, though it is expected to represent a vast majority of its sales.
In addition, more than 87 percent of the 968 million people logging into Facebook each day did so from a smartphone or tablet.
Facebook said one out of every five minutes people spend on a mobile device, they do it on Facebook service. Overall, he said, people spend more than 46 minutes per day on Facebook broadly, not including WhatsApp. 700 million people have use its Messenger messaging service, he said, and its app has been downloaded more than 1 billion times on mobile devices powered by Google's Android software.
For its second quarter, ending June 30, Facebook said its overall revenue of $4 billion rose more than 38 percent from the same time a year ago. That beat the $3.99 billion expected by analysts polled by Thomson Reuters. The strengthening US dollar in trade across the globe hurt Facebook's revenue, the company added, reducing it by about $330 million.
Profit fell nearly 10 percent to $719 million from the same time a year ago, however, spooking investors who drove the company's shares down about 3 percent in after-hours trading. Facebook's stock has risen more than 24 percent so far this year.
Facebook said its expenses fell, though, and that it expects costs to grow between 55 percent and 60 percent this year, which is less than the 55 percent to 65 percent range it offered earlier this year.
After adjustments for items like stock-based compensation, Facebook said it earned 50 cents per share, above the 47 cents per share analysts had been expecting.