Facebook continues to have another good quarter - the social media giant announced its total revenue grew by 56% YOY to US$7 billion, and advertising revenue was up 59% to US$6.8 billion.
Its mobile advertising revenue hit US$5.7 billion, representing approximately 84% of advertising revenue for the third quarter of 2016, up from approximately 78% of advertising revenue in the third quarter of 2015.
Monthly active users rose to 1.79 billion, higher than the expected 1.75 billion. For the first time, more than 1 billion users were active on their phones every month.
Facebook CEO Mark Zuckerberg explained in the earnings call that Instagram is well into the third stage — the app has over 1 million business accounts, serves ads, and is starting to let people shop for things. Although Facebook doesn’t release Instagram’s revenue, analysts believe it is already contributing nicely to the top line.
Zuckerberg said over the next five years, the company is going to keep building ecosystems around products that a lot of people already use every day.
"Instagram, Messenger, and WhatsApp each have large communities, but we have a lot more work to do on all of them."
He laid out how he thinks about monetising products in three phases.
The first phase is building a great consumer experience and getting it to scale. The second phase is about enabling people to organically interact with businesses. And then the third phase is to give businesses tools to reach more people, and that's where we build our business.
Right now, he said Instagram has moved into that third phase. Instagram has more than 500 million monthly actives and more than 300 million daily actives. "We're making good progress helping businesses and marketers use Instagram in new ways."
Meanwhile, its messenger is early in the second phase. With 3,000 bots live on messenger, the social media giant also launched Messenger Lite, which is designed to make messaging fast and easy with a wide variety of Android phones and for people who are on slower networks as well.
"A lot of businesses use WhatsApp already, but we're going to really start working on the second phase in the next year. Right now, we're testing new camera features and we're continuing to keep features fast and reliable on multiple devices and every network condition."
When it comes to how to grow the business with advertisers, Facebook COO Sheryl Sandberg said the company will continue to focus on three priorities: capitalising on the shift to mobile; growing the number of marketers using ad products; and making ads more relevant and effective.
"We're excited to see the world's largest advertisers realise that the small screen is big," she commented.
"In September, P&G chief brand officer, Marc Pritchard, GM CEO, Mary Barra, and I addressed the Adweek audience together. Marc described how P&G is creating mobile video ads designed to grab attention in the first few seconds," she added.
The company also said desktop ad revenue grew 18% YOY, and that getting around ad blockers was largely the cause for that boost. While Adblock Plus announced it would circumvent the ban, and temporarily did, Facebook nullified that change and has managed to keep ads going through Adblock Plus' barriers. Facebook’s position is that ads help pay for operating its service, so it’s reasonable to force users to see them as long as they’re not too interruptive.
During the call, Facebook CFO David Wehner said, "On ad blocking, in terms of the impact, I would just point out that this quarter we had 18% year-over-year desktop revenue growth. If you look at recent quarters, it was about half of that growth rate on a year-over-year basis. So that increment, that acceleration in desktop revenue growth is largely due to our efforts on reducing the impact of ad blocking. So that's what led to the acceleration of desktop revenue growth."