The FBI has been running advertisements on Facebook’s (FB) namesake social network, according to a CNN report. Facebook’s namesake network reaches over 240 million people in the US and Canada. The FBI has targeted its Facebook ads to the audience in the Washington, D.C., area. The agency’s Facebook ads seem to seek to recruit people who could help the US spy on Russia. The FBI’s budget for Facebook advertising calling for Russian spies is unknown. However, the agency has likely been running the ads on Facebook for months.
FBI and Trump feed Facebook’s advertising business
The FBI’s spending on Facebook ads comes as Trump also has stepped up ad spending on the platform. The Trump campaign spent about $2.0 million on Facebook ads about the Trump impeachment topic in the final week of September. The Trump campaign has spent close to $20 million on Facebook ads since at least May 2018. Moreover, pro-Trump entities are spending equally large sums on Facebook ads. For example, conservative media outlet Epoch Times spent over $2.0 million on pro-Trump ads on Facebook before Facebook decided to reject its money.
Politicians seeking the Democratic presidential nomination for the 2020 election are also spending big on Facebook ads. The Wall Street Journal reported in August that the cost of advertising on Facebook had shot up significantly because of strong demand from Democratic politicians.
We believe the 2020 presidential race would throw more advertising dollars Facebook’s way. However, even as Facebook reaps big benefits from political ads, it’s sought to regulate its political advertising business more closely. The company recently updated its advertising rules to restrict political advertising on its platforms. For example, the updated rules make it difficult for foreign entities to run political ads on Facebook in the US. Facebook, Google, and Twitter came under fire after the 2016 presidential election for allowing Russian meddling in US domestic politics.
The importance of the advertising market
Advertising is Facebook’s main source of revenue. Therefore, strong demand for its advertising service should be good news to the company. Facebook made $55 billion in advertising sales in 2018. According to eMarketer estimates, Facebook’s advertising sales will jump to $67.4 billion in 2019. That will see Facebook rank as the world’s second-largest seller of digital ads behind only Google (GOOGL). Alibaba (BABA), Amazon (AMZN), and Baidu (BIDU) are also big in the advertising business.
However, Facebook is the most dependent on the advertising market among its major peers. Advertising sales contributed 99% of Facebook’s total revenue in the second quarter. In contrast, advertising sales contributed 84% of revenue at Google parent Alphabet in the second quarter. At Baidu, advertising sales contributed 73% of revenue in the second quarter.