Facebook saw a decline in usage for the first time in its history, undoubtedly brought about by certain changes made to its News Feed. Despite that, the social media company’s digital ads remained profitable, stemming any concerns investors might have.
Facebook recently released its earnings report for the last quarter of 2017. The report underlined the effects of Mark Zuckerberg’s campaign to improve his company while also emphasizing the social media giant is still a force to be reckoned with in the business sector.
Facebook’s founder mentioned in the report how the company made changes so that fewer viral videos were shown. The changes “reduced time spent on Facebook by roughly 50 million hours every day.” Those hours showed up as a decrease from 185 million daily active users (DAU) in the US and Canada to 184 million users.
“The story about Facebook’s revenue growth now is not about shoving more and more ads into the newsfeed….it’s all about ad prices,”says @ShiraOvide https://t.co/zgajgqnnHo pic.twitter.com/qgR9lUmdpE
— Bloomberg Gadfly (@gadfly) February 1, 2018
It’s the first time that the company has reported a reduction of users in any of its market. Some sectors could even have been alarmed by the fact that this decline happened in the region where Facebook earns the most from advertisements. The company makes an average profit of $26.76 per user in the region, as opposed to the worldwide average of $6.18.
However, the reported dip in users and time spent on the social media platform didn’t seem to hurt Facebook’s bottom line. According to the company’s earnings report, revenue in the last quarter of 2017 hit $12.97 billion, up from the $8.81 billion it garnered during the same period in 2016. This was an increase of 47% and it topped the $12.55 billion average projected by the analysts over at Yahoo Finance.
The boost was apparently due to Facebook’s mobile ad sales, which included that from its sister company Instagram. The increase was also aided by the company’s marketing tools, which are steadily becoming more precise.
Revenue from its mobile ad sales represented around 89% of the last quarter’s total ad sales and is up to 84% compared to the year before. It has been estimated that Facebook’s profits from its global ads this year would reach $53.84 billion, placing it behind Google as the biggest ad seller in the world.
More changes are expected to come to Facebook, as Zuckerberg wants it to be more than just a fun platform. In his statement, he said he wanted his brainchild to also be “good for people’s well-being and for society” and plans to do so via more meaningful connections.
He parlayed any concerns investors might have by saying that the user drop was just temporary and was needed to make a stronger product. Zuckerberg also emphasized that worthwhile interactions would lead to a stronger community and that the care users would have for this group would make them more amenable to seeing ads.