In recent times, Facebook has focused a lot on advertising on its platform, the results of which are turning out to be very encouraging for it. In the first quarter of 2021, the revenue of Facebook from advertising has gone up by 146% as compared to the earnings posted by the company in the first quarter of 2020.
In addition to this, as per an official statement of Facebook, the revenue from advertising witnessed a growth of 30% in year-on-year basis. Also, an increase of 12% in the number of ads posted on the platform was also recorded. This is a massive improvement, considering the fact that the daily active users of Facebook have risen by only 8%. The main reason behind this massive rise in earnings is due to a subsequent increase in ad prices as compared to 2020.
Effects of COVID-19 on Facebook’s revenue:
Many of the countries underwent lockdown in the beginning of the first quarter of 2020 due to COVID-19 outbreak, the aftereffects of which somehow remained throughout the entire calendar year of 2020. This was one of the major reasons why revenue was much lower in 2020, and saw a huge uptick in 2021.
When the lockdown restrictions were relaxed in the later stages of 2020, the acceptance of digital marketing and advertising saw an instant rise. The work-from-home culture and quarantine gave many people the luxury of checking out the latest trends and products in the market from the comfort of their home on screens. This resulted in the increase of competition and ad prices.
Advertising strategy for the times ahead:
For the coming times, given slightly more relaxation from lockdown and reducing after-effects of COVID-19, the revenue from advertising is expected to rise even more, due to increase in ad prices. Facebook’s COO Sheryl Sandberg believes that personalized advertising is better as they can be privacy protected, which is why Facebook is focusing more on it.
Changes for Facebook in this duration:
During this phase, advertising on Facebook was somehow expected to be affected by the arrival of Apple’s iOS 14 and IDFA. As per these new updates, the users of Apple iOS will have to agree to tracking across applications, with the advertisers required to give a sort of disclaimer with the text of 1-2 short lines.
Initially, Facebook was against this idea, as it believed that it will have a negative impact on the revenues of publishers. Regarding this, an official statement of Facebook stated that it knows that these changes in iOS will have an adverse effect on the ability of publishers to monetize through the network of audiences. At that time, Facebook also believed that these changes will make the audience network almost ineffective on iOS 14.
However, an update from Facebook followed this statement, in which it confirmed that it will be accepting the SKAdNetwork API of Apple. However, at the same time, it will not accept Private Click Measurement (PCM), though for measuring conversion events, it created Aggregated Event Measurement for iOS.