Facebook scores earnings win on holiday retail advertising

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Facebook has beaten quarterly earnings estimates after heavy holidays advertising by retailers, but cautioned Apple’s impending privacy fluctuations could hurt revenue by interfering with ad targeting.

The world’s biggest social networking company said it expected to face “significant ad targeting headwinds in 2021.” Facebook predicts the update of Apple’s operating system to iOS 14 could start biting its revenues as soon as the end of their first quarter.

Shares were level after hours following an original fall.

The fourth-quarter results validated the organization’s focus on making it easier for retailers to sell merchandise to Facebook users, who frequently were stuck at home last year throughout the ongoing global coronavirus pandemic.

By way of instance, Facebook established Facebook Pay and Facebook Shops which enable consumers to click on ads and make purchases without leaving the company’s apps, which also include Instagram and WhatsApp.

The business stated the pandemic-driven spike in online commerce and shift in consumer demand to products over services buoyed revenue growth, which has been cooling steadily as its business matures.

Total revenue, which consists almost entirely of advertising sales, climbed 33% to $28.07 billion in the fourth quarter ended on the 31st of December from $21.08 billion a year earlier.

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Analysts on average estimated annual revenue of $26.44 billion, based on IBES data from Refinitiv.

Net earnings came in at $11.22 billion, or $3.88 per share, in comparison to $7.35 billion, or $2.56 per share, a year earlier.

Monthly active users rose 12% to 2.80 billion, over the 2.75 billion that industry analysts had expected.

While fiscally powerful, Facebook has faced criticism about misinformation and calls for violence on its platforms tied to the US presidential elections, such as the storming of the Capitol building in Washington DC on the 6th of January.

Facebook CEO Mark Zuckerberg told investors at a call that he wanted to “turn down the temperature” of political conversations as “people don’t want politics and fighting to take over their experience on our services.”

An election-related moratorium on political-group recommendations to US consumers will get permanent and political material in the network’s newsfeed will fall. These changes will not hurt Facebook’s financial outlook, ” he said.

Mr Zuckerberg also took aim at Apple Inc, which he explained Facebook executives increasingly view as the company’s biggest rival, though the iPhone maker earns just a small fraction of its earnings from digital advertising.

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Apple’s core business “depends more and more on gaining share in apps and services,” explained Mr Zuckerberg, giving it “every incentive to use (its) dominant platform position to interfere with how our apps and other apps work.”

Facebook has feuded with Apple for weeks over the iPhone manufacturer’s plan to restrict app programmers’ collection of user data from other apps. Facebook uses the data to improve ad targeting.

“In the end, I really don’t think Facebook is going to be affected as much as others as Facebook can provide workarounds for advertisement targeting,” said analyst Jonathan Kees of Summit Insights Group.

The team at Platform Executive hope you have enjoyed this news article. Translation from English to other languages via Google Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Chavi Mehta in Bengaluru and Katie Paul in Palo Alto. Additional reporting by Munsif Vengattil and Elizabeth Culliford. Editing by Sriraj Kalluvila and Cynthia Osterman.

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