Facebook Ads More Expensive in 2017?

With fantastic improvements in targeting leading to much better ROAS for many advertisers, Facebook revenues are up 59% in the third quarter compared to Q3  of 2015.
While this is good news on the surface Facebook did predict in its third quarter results a slowdown in growth. CFO David Wehner said advertising growth rates will slow “meaningfully” in 2017. This is because Facebook doesn’t want to put off users with too many ads.
Facebook Q3 results announcement at a glance:
  1.  1.18 Billion Daily Users
  2. 1.79 Billion Monthly Users
  3.  $6.8 Billion in Advertising
  4. Ad Growth Will Slow
  5. Video Only News Feed on its Way

The video only feed has been tested in a few markets over the last year and you will be able to access it through a new navigation icon at the bottom menu area on mobile devices. Mark Zuckerberg announced that there may be a “general release” very soon.


Why should you care?

While all this looks positive at face value, things may just get harder over the next 12 months for advertisers. The big red flag in the announcement was the reason ad growth will slow. Not wanting to put users off with too many ads is another way of saying they have maxed out the ad impression share on users feeds.

What this could very well mean in the next 12 months is that increasing demand from advertisers and no more room for ads will put pressure on pricing. A simple “supply and demand” economists view on this situation would indicate that the cost of advertising can only go up. We have all experienced the impact of competition for limited spaces in the Google PPC model and it looks like we have reached that point with Facebook.

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About the Author Glenn Marvin

Glenn is a Partner and Senior Consultant who has had a very successful career building growth companies in the private equity arena. He has a wealth of experience in both the digital space and strategy development. Prior to becoming a partner in SureFire Glenn built one of the largest digital teams in New Zealand for a NASDAQ listed global online marketing company & Google's largest premium partner.

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