If you’re paying attention to the Q4 earnings coming out this week, then you know earnings for Facebook, Google, Amazon, and others brought out some interesting results — many of which impact marketers.
We took a look at what each had to say, and there are a couple of key themes we wanted to make note of for those following along:
Mobile is the driving force behind revenue
This on-the-go form factor continues to impress with the numbers it pulls in. Facebook reported mobile ad revenue increasing 57%, reaching $11.4 billion and accounting for the vast majority of its total ad revenue, with mobile representing 89% overall (up from 84% in Q4 2016). Google has also become more effective at delivering ads on mobile, which experts feel led the charge in generating $110.9 billion in full-year revenue (up 23% from 2016).
We know mobile is — and will continue to be — a huge focus for marketers, and for many this platform will be imperative to their success. It’s forecasted that smartphone retail sales alone will reach nearly $334 billion by 2021 and account for 80% of all mobile sales. To dive deeper, we broke down performance of app versus mobile web throughout Q4 among retailers, with apps seeing:
Mobile is important, that’s a fact, but apps have proven to drive more incremental revenue over mobile web. Once users get to the point-of-purchase, driving them in-app will increase conversions, and ultimately revenue.
Ad prices are climbing
Get ready for sticker shock. Facebook stated yesterday that the average price per ad increased 43% throughout Q4, while ad impressions shown only increased 4%. The company is remaining cognizant of the ad inventory available on the platform, and combined with the Newsfeed changes is working to create a better quality experience for users — but marketers are having to pay (literally…).
Mobile marketers still see Facebook as a valuable piece of their overall strategy, that’s a given. But as it becomes significantly more expensive to reach Facebook users, marketers will need to explore other channels to drive both incremental revenue and user acquisition that’s cost-effective and efficient. In fact, in a recent report we did with App Annie — 2017 Index: The Mobile Consumer — we found that mobile purchase conversion rates for social and search landed at 1% and 4%, respectively. This was significantly lower than the partnerships channel (aka “affiliate channel”), which came in at 25%. And within this same study, it was found that 55% of consumers stated they have never downloaded an app and/or made a purchase immediately after seeing a Facebook ad. So the question at hand: if consumers aren’t engaging and purchase conversions are low, why are marketers so fond of the increasingly-pricier platform?
New competition to the field
This quarter we saw slight shifts around focus and performance for two big players. Commerce is set to be a big part of what’s driving Facebook’s ad business, according to Facebook COO Sheryl Sandberg during the company’s Q4 earnings call. And while Google’s ad business reported $27.27 billion, its cost-per-click (CPC) continues to decrease YoY, which Alphabet has attributed to the shift in mobile.
This duopoly has long owned the ad space; however, one company seems to be giving the two a run for their money: Amazon. While not mobile-specific, the retail giant reported during its Q4 earnings call that “advertising was a key contributor [to strong growth]” and they will “continue to make the offering more valuable.” Amazon’s “other” revenue, which experts consider ad sales, increased to $1.7 billion in the fourth quarter, a 60% growth year-over-year. Citi analysts also predicted this week that Amazon ad sales would soar to $10.2 billion in 2018, with expected revenue to rise to $50.6 billion by 2028. Given how well Amazon’s app performs (orders on the app this past Cyber Monday had increased more than 50% worldwide, compared to 2016) we think it’s safe to say this ad revenue spills into mobile as well.
As marketers explore options outside the usual duopoly, they’ll need to consider what’s important: increasing discoverability in a cost-effective way while targeting the places where consumer intent lies. At Button, we believe consumer intent lies elsewhere on mobile — beyond Google and Facebook’s ad-dominated duopoly — and in significantly higher-converting channels. Brands need to focus on targeting these moments of intent, connecting people to what they want in the moment they want it.
Curious about Button and how our technology works? We were built to drive commerce on mobile, so let us do what we know best. Dive into an overview here or check out our site to learn more!