Facebook (FB) Has 5M Active Advertisers Says Sandberg

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FacebookFB is seeing a rapid increase in advertisers. Talking to Reuters, Facebook COO, Sheryl Sandberg said that the company now has 5 million active advertisers.

In Mar 2016, the company announced that it had 3 million active advertisers which grew by another 1 million in September. Per reports, about 75% of the 5 million advertisers are outside of U.S (mostly from Thailand, Brazil, India and Mexico) and are mostly from verticals like media, e-commerce, entertainment and retail.

Media reports further add that in order to lure more small advertisers, Facebook has also unveiled new tools, including an easier way to make ads by mobile video. Mobile has played a major role in Facebook's explosive growth. Nearly half of the active advertisers use mobile phones to create ads, while 90% of users access their Facebook accounts through phones. As many as 65 million businesses have their own Facebook page while 8 million advertisers are present on Instagram.

Facebook, Inc. Price

Facebook, Inc. Price | Facebook, Inc. Quote

To make it easier for advertisers to upload ads using mobile devices, Facebook has updated its Ads Manager app, with a "one click" option to "reinstate high-performing ads". In addition, there is a desktop tool to help deal with customer messages, which is, in fact, an expansion of the Single Inbox feature.

Sandberg was quoted saying, "What's incredible about our 65 million small businesses is we didn't call them, we didn't write them, we didn't show up at their door to sign them up. They already use Facebook as a person. They have a profile, they see Pages. That's a pretty incredible place to start, and that's why we think our business has grown so quickly."

In fact, Sandberg highlighted the importance of small business in creating jobs. She was quted saying, "Small businesses provide important goods and services. They're also really important in job creation. More than half of all jobs that have been created in the last several decades in the U.S. are created by small businesses. The future of work is something people worry about. Small businesses are a critical part of that answer."

Like all other social media sites, Facebook's ad revenues constitute a major portion (over 95%) of its revenues. Facebook has witnessed significant traction in online and mobile advertising spending in a short span of time. In the fourth quarter of 2016, ad revenues grew 53% year over year to $8.6 billion while mobile ad revenues were up 61% to $7.2 billion. Most importantly, average price per ad increased 3% from the year-ago quarter. Furthermore, ad impressions grew 49%, due to increases in mobile impressions. The increase in mobile advertisement stems from the fact that mobile ads have far more ad recall value than other mediums. Facebook is aggressively monetizing this shift of marketers toward mobile in order to target customers.

However, stiff competition for ad dollars is concerning. Though Facebook and Alphabet dominate this space, Alphabet leads by a wide margin. Per a recent eMarketer report, U.S digital ad spending will grow 15.9% to $83 billion in 2017, with Alphabet's Google accounting for 40.7% of the ad revenues. Also, Google will lead search market revenues with 78% share of the domestic search ad revenues. For the year, Google's search revenues are expected to be up 16% to $28.55 billion.

On the other hand, Facebook's share of the total U.S ad digital spend will be much less than that of Google. However, Facebook continues to net the biggest domestic revenue share of the display business. In 2017, the company's display business will likely grow 32.1% to $16.33 billion, representing 39.1% of the total display market. Instagram has emerged as an important cash cow and will contribute 20% of Facebook's U.S. mobile revenue compared with 15% reported last year.

Zacks Rank & Share Price Movement

Facebook carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

In the past one year, Facebook's shares have registered growth of 29.41% compared with the Zacks Internet Services industry's gain of 7.75%.

Stocks to Consider

Better-ranked stocks in the wider technology space include Tech Data Corp TECD , Leaf Group Ltd. LFGR and MeetMe, Inc. MEET . While Tech Data sports a Zacks Rank #1, Leaf Group and MeetMe carry a Zacks Rank #2 (Buy).

In the trailing four quarters, Tech Data, Leaf Group and MeetMe have yielded positive average earnings surprises of 8.73%, 27.94% and 36.07%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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