The good news is that Facebook is still clearly able to squeeze revenue out of its existing users, with the company reporting a Q4 average ad revenue per user (AARPU) in the US and Canada of $34.09, up by 29.8% over Q4 2017. Worldwide AARPU was up by 19.2%, reaching $7.25 in Q4 2018.
2. Advertising in Stories is more popular than people thought.
Stories were one of the trendiest marketing vehicles of 2018, and it seems there was truth behind the hype. Facebook said 2 million advertisers were active on Stories on Facebook, Instagram and Messenger last year. That’s close to one-third (28.6%) of the 7 million total active advertisers across all of its apps.
But Stories monetize at a lower rate than the news feed, and Facebook admitted that could hurt its bottom line this year. “We’re seeing the mix shift toward Stories. And that is going to be something that will contribute to a deceleration of revenue growth…in 2019,” Facebook’s chief financial officer David Wehner said during the earnings conference call.
As the audience for Stories grows, however, we’re likely to see more advertisers come into the fold, driving up prices. In Q4 2018, there were more than 500 million daily active users of Instagram Stories. In June 2018, that figure was 400 million.
3. More commerce is coming.
Shopping was certainly top-of-mind for Facebook executives during the conference call, with Mark Zuckerberg, chairman and CEO of Facebook, calling it “one of the most exciting product opportunities.” That said, don’t expect ecommerce to outrank advertising as a revenue source for Facebook anytime soon.
“Ecommerce is an important vertical for our advertising business. Our success in…continuing to build good advertising products for our ecommerce clients will be a more important contributor to revenue in the foreseeable future than the new areas,” Wehner said.
Those new areas include products that would improve the shopping experience on Instagram and on Marketplace, Facebook’s ecommerce platform, as well as enabling payments.
Facebook has already started testing WhatsApp payments in one country: India. During the earnings call, Zuckerberg revealed that the service, called WhatsApp Pay, would be rolled out to more markets in 2019. He didn’t specify which ones, but it’s likely to be other places where WhatsApp has seen strong adoption, such as the Netherlands, Italy, Spain, Germany and Finland.