Earnings per share: $1.74
Revenue: $13.23 billion
Net income: $5.106 billion
Mobile advertising revenue share: 91% of all ad revenue.
Daily active users: 2.5 billion individual people across all apps.
FB stock went down about 20% in after-hours trading and it’s making headlines everywhere this morning. Investors and the press really didn’t like the slower growth rate and the lack of growth in US+CA and Europe.
The Crew’s take on it:
Boy, oh, boy, where do we start. Let’s put some context around the numbers first because the stock performance would make many people panic.
Facebook announced that it didn’t grow in the USA and Canada. It has 241 million monthly active users there, the same as last quarter. And it got a lot of flames for that.
USA + Canada will then be a possible reach of 320.54 million people for Facebook, and the platform has 241 million monthly active users here.
That’s 75.2% of the total possible population that uses Facebook at least once a month.
This doesn’t even include stats about age, that will probably make it look even better for Facebook.
So now our question is WT(AF)F are these people thinking!? That Facebook can have 110% of the population as monthly active users? If people are surprised because FB didn’t grow in USA + Canada, they forgot to do a few calculations.
What should certainly worry investors at least a little is the decrease of active users in Europe, from 377 to 376 million. Not a huge decrease but shows that GDPR had an impact.
Facebook earns $8.76 per European user (and an even greater $25.91 in North America) compared to only $1.91 for the Rest of World.
CFO David Wehner also warned that revenue growth will decelerate, after year over year growth was 42%.
OK, now with that rant out of the way… Let’s try to summarise. Facebook is growing but slower. GDPR had an impact. Investors were surprised.
Facebook wasn’t. Why do you think they bought Instagram, WhatsApp, Oculus, etc. They knew it was a matter of time for this to happen.
They are also always developing new ad units and new ways to increase average revenue per user.
So, our conclusion is that there’s a high chance the market over-reacted (if the previous stock price of Facebook was accurate) and that unless there are certain regulations only investors know about, there’s no reason to panic as an advertiser.
You should still explore other traffic sources and try to create a direct connection to your audience. That’s whether or not Facebook is growing.
Oh, and we recommend avoiding all the stock price discussions in Facebook groups. Correctly pricing a stock is not done by advertisers, journalists, or newsletter writers. Heck, even analysts get it wrong pretty darn often.
Whether someone says “buy” or “sell”, do your own research, please.
Facebook gets a business license in China… Aaaaand it’s gone
And here’s another sign that Facebook is not done for just yet, even with the slowdown in growth. They are trying to get a business license in China.
They even got one but quietly had it revoked for reasons unknown.
They are certainly making some progress there and will continue trying to expand.
Facebook’s ad interactions drop 20%
Let’s talk some engagement because that also matters for FB when it comes to revenue.
This article from TheNextWeb takes a closer look at Facebook’s engagement numbers and compares them to the last quarter.
This graph shows the global Facebook activity frequencies performed by its users.
Most Facebook users only ever like one Page, and that ‘like’ is far more likely to go to a celebrity or a sports team than it is to go to a typical brand.
But even if you grow a sizeable Facebook Page fan base, you’ll still need to pay to reach most of your ‘fans’ every time you want to reach them.
The latest data from social listening company Locowise suggest that the average Facebook Page post reaches just 6.4 percent of its Page’s fans organically.
So if you need to reach a sizeable audience on Facebook on a regular basis, use promoted posts instead of trying to build your Page’s fanbase.
Engagement numbers, in general, seem to be quite low with only four comments and one share a month for the average user.
The most relevant number when it comes to making money is “ads clicked in the last 30 days”. This number has dropped dramatically in the past three months, from ten to only eight adverts clicked per month.
The graphic above also shows that female users engage more than men. It’s also worth noting that users between the ages of 35 and 54 are clicking on the greatest number of adverts each month.
Facebook introduces Watch Party feature
Declining user engagement is one of Facebook’s biggest problems, and they aren’t asleep.
Yesterday, the Watch Party feature launched around the world.
It’s a new way for people to watch videos on Facebook together in real time.
Once a Watch Party is started, participants can watch videos, live or recorded, and interact with one another around them in the same moment.
New key features are:
- Co-hosting, which lets the host of a Watch Party designate other co-hosts who can add videos and keep the party going.
- Crowdsourcing, which lets anyone in a Watch Party suggest videos for the host to add to the Watch Party.
Facebook for you, as an affiliate and advertiser
Look, we briefly mentioned in our thoughts on the earnings call but we want to reiterate it here: don’t panic and don’t build your business around a single platform.
You will have to start somewhere, and sometimes you won’t have a choice. And that’s OK.
But, as much as possible, you should try to make sure your business doesn’t depend on Facebook, Google, Apple, Microsoft, Amazon or any other one company.
As a marketer, one way to do that is to run many traffic sources and/or by creating a direct connection with your potential audience.
Whether that’s over email, push notifications, SMS, etc. it’s up to you and what you think fits best.
And even if you are too late and the platform just screws you over, keep calm and use what you’ve learned in your next venture.
With the risk of sounding like a broken record, things don’t always go as expected and nobody has a perfectly smooth business.
The ones that thrive are those who can best adjust to ever-changing market conditions.
Simple as that.
Cool tech, (funny) business, lifestyle and all the other things affiliates like to chat about while sipping cocktails by the pool.
Bring on the Martians!
Let’s talk some non-Facebook and more fun stuff at the poolside.
Researchers have made a breakthrough with regards to Mars. No, no life discovered but it’s probably the closest step.
They’ve identified liquid water on the Red Planet.
The discovery was made by a team led by Roberto Orosei from Istituto Nazionale di Astrofisica in Bologna.
This changes some assumptions scientists made so far about the planet, and it also changes the way they can think about humans colonizing the planet!
Are you a total geek for this stuff? You can read their publication with all the details right here.
WHAT THE AFF… is reading
Here at WHAT THE AFF we enjoy reading books on business, economics, psychology, marketing and the likes.
We basically always have one book we are reading and very little off time. The ones we find very good, we’ll share with you.
Gregor is reading Thinking: Fast and Slow by Daniel Kahneman
“The book is a masterpiece in behavioural economics. It shows many situations, all underpinned by examples, where we make mistakes on a regular basis when it comes to economic decisions.
And it also shows how bad we are in spotting those mistakes. Even if we know about these mistakes, it’s hard to avoid them in the future since it requires to actively pay attention to every decision process.
One thing I noticed while researching content for today’s newsletter was how bad many journalists are when it comes to interpreting numbers. So I will just quote the key takeaways from the book’s chapter “the law of small numbers”:
Statistics produce many observations that appear to beg for causal explanations but do not lend themselves to such explanations. Many facts of the world are due to chance, including accidents of sampling. Causal explanations of chance events are inevitably wrong.
The exaggerated faith in small numbers is only one example of a general illusion – we pay more attention to the content of messages than to information about their reliability.
It’s one of the best books I’ve ever read and I would recommend it to absolutely everybody, especially when you are dealing with numbers on a regular basis.”