Facebook's rising ad prices are more than making up for slowing growth

Kalerkantho Online   

2 February, 2018 12:33 PM

Facebook's rising ad prices are more than making up for slowing growth

David Wehner, CFO at Facebook.

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Facebook is showing that it's plenty capable of finding revenue expansion even if users drop off and ad growth slows.

In 2017, the number of ads Facebook delivered rose 15 percent from a year earlier, slowing from 50 percent growth in 2016, according to itsannual report that was filed on Thursday.

Yet the average price per ad increased by 29 percent, compared with growth of about 5 percent in 2016, the filing said.

Facebook has said that ad growth would slow as the news feed gets saturated, but that's only now showing up in the numbers. Finance Chief David Wehner told analysts on a conference call on Wednesday that average ad prices in the fourth quarter rose 43 percent from the prior year, with ad impressions up 4 percent.

Advertisers are so eager to reach Facebook's user base, which exceeds 2 billion people a month, that they're willing to pay higher prices.

"The increase in average price per ad was driven by an increase in demand for our ad inventory," the filing said.

Facebook said on Wednesday that its base of users in the U.S. and Canada fell from 185 million a day in the third quarter to 184 million in the fourth, the first drop in the company's history. Still, the stock price rose more than 3 percent because Facebook reported fourth-quarter revenue and adjusted profit that topped analysts' estimates.


Source: CNBC.com