A Look at Facebook’s Advertising Business

Neha Gupta - Author

Nov. 20 2017, Updated 4:45 p.m. ET

Advertising business grew 49% YoY

Facebook’s (FB) advertising business, which contributed more than 98% of its total revenue in 3Q17, recorded a 49% YoY (year-over-year) rise in ad sales. That was a faster growth than in 2Q17. Facebook’s advertising sales increased 47% YoY in 2Q17.

In 1Q17, Facebook’s advertising sales increased 51% YoY. Advertising sales increased 59% and 53% in 3Q16 and 4Q16, respectively.

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Facebook grew ad sales faster than most of its rivals

Facebook increased its advertising sales faster than most of its industry competitors in 3Q17. Alphabet’s (GOOGL) advertising sales increased 21.4% YoY in 3Q17, Yelp’s (YELP) increased 18% YoY, Snap’s (SNAP) increased 59% YoY, and Twitter’s (TWTR) decreased 8% YoY.

Factors in play

The increase in Facebook’s advertising sales in 3Q17 was partially supported by an increase in average advertising prices. Facebook said its ad prices rose 35% YoY on average for the quarter, which was more than the 24% YoY increase in average ad prices in 2Q17.

The rising ad prices also suggest a strong, growing demand for Facebook’s advertising products, which is allowing the company to charge higher rates without the risk of turning away advertisers. Facebook said it now has more than 6 million active advertisers. In April 2017, Facebook announced that it had 5 million active advertisers.


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