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A Survey of Facebook’s Advertising Business after Its 4Q17 Earnings

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Facebook’s ad business draws significant attention

On January 31, 2018, Facebook (FB) released its 4Q17 and fiscal 2017 earnings results after regular trading in the US stock market had ended. Because Facebook generates the majority of its revenues from advertising, its advertising business is spotlighted when the company releases new earnings results. This earnings release was no exception.

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Ad sales grew in 4Q17 and 2017

Facebook’s advertising business grew in both 4Q17 and fiscal 2017. In 4Q17, advertising sales jumped 48.0% YoY (year-over-year) to $12.8 billion, while its advertising sales increased 49.0% in fiscal 2017. 

Facebook’s advertising business grew faster than its overall business, which grew 47.0% in both 4Q17 and fiscal 2017. Advertising sales increased 53.0% and 57.0% in 4Q16 and fiscal 2016, respectively. Facebook’s advertising business grew faster than the overall business in both 4Q16 and fiscal 2016.

Facebook, which last revealed that it has more than 8.0 million advertisers between its main social media platform and Instagram, sold more ads in 2017 than it did in 2016. The number of ad units the company delivered in 2017 increased 15.0% over its 2016 metric.

Facebook outpaced Google in ad business growth

As with Facebook, Twitter (TWTR), Snap (SNAP), Yelp (YELP), and Alphabet’s (GOOGL) Google also look to advertising sales for the majority of their revenues. In 4Q17, Facebook’s ad sales increased faster than Google’s ad sales in the same quarter at 48.0% YoY against 21.4% YoY. Google is Alphabet’s largest operation.

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