Facebook’s Ad Business Drives Surge in Revenue, Following Google’s Act – The Wall Street Journal
Facebook Inc.’s booming advertising business drove revenue and profit sharply higher, as the company pledged to navigate Apple Inc.’s new ad-targeting rules and accelerate investments in e-commerce, mixed reality and tools to help creators make money from their content.
The social-media giant on Wednesday said its first-quarter earnings report reflected the past year’s trend of people spending more time and money online and advertisers redirecting their resources to take advantage of that shift. The parent of Facebook, Instagram and WhatsApp said the average price per ad and the number of ads it delivered during the January-through-March period increased.
Advertising revenue, which accounts for the lion’s share of Facebook’s total revenue, rose 46% from a year earlier to $25.44 billion. The company’s profit nearly doubled to $9.5 billion, or $3.30 a share.
“Because of the strong demand for advertising, you’re seeing an ability for companies to raise prices,” said D.A. Davidson analyst Tom Forte.
The breakneck pace of growth might not be permanent. The global advertising business slowed dramatically in the early days of the pandemic, but Facebook as well as other digital platforms rebounded quickly and posted strong revenue and profits in the second half of 2020. As a result of tough financial comparisons and Apple’s new rules, the social-networking company said it expects year-over-year revenue growth to slow in the third and fourth quarters.