Advertiser Boycott Had Little Impact on Fb’s Q3 2020 Income, Which Rose 22%
Whatever effect the monthlong boycott of advertising on Facebook in July by dozens of large brands may have had on the company’s third quarter revenue in 2020 was offset by the pandemic-induced shift to ecommerce by many businesses, as Facebook reported strong financial results Thursday after market close.
Third-quarter revenue of $21.47 billion—all but $249 million of it from advertising—was up 22% from $17.652 billon in the third quarter of 2019, and the company reported a 29% year-over-year increase in net income to $7.846 billion from $6.091 billion.
Social media marketing platform Socialbakers said in its recently released Q3 Social Media Trends Report that reach for Facebook ads in North America soared 134.9% in the third quarter compared with the year-ago period, while worldwide cost per click was up 42.4% year-over-year, marking a return to pre-pandemic levels.
And a similar analysis from performance marketing agency Merkle pegged YoY spending growth for Facebook ads at 12% and noted that overall ad spend on Instagram was 34%, with ad spend on Instagram Stories up 29%. Facebook does not break out Instagram’s results.
eMarketer principal analyst Debra Aho Williamson said in a statement: “Facebook has rebounded nicely from both the early pandemic advertiser pullout, when marketers pulled ads across all media to redo messaging or conserve funds, and from the July ad boycott. Despite its challenges with election turmoil and content moderation, it remains a go-to for advertisers seeking to engage a broad base of consumers.”
Martin Garner, chief operating officer of mobile and wireless industry analysis firm CCS Insight, said in an email: “As part of its coronavirus response, Facebook—like Google—boosted its shopping initiatives to try to increase the level of purchasing activity that takes place on its site. The main effect of this is likely to be seen in increased advertising activity on Facebook, rather than by the company taking a share of the transactions.”
Facebook chief financial officer David Wehner said in a statement that Facebook expects fourth-quarter revenue to grow at an even higher rate, driven by strong advertiser demand during the holiday shopping season and strong orders for its Oculus Quest 2 virtual reality headset.
He also pointed to “a significant amount of uncertainty” for 2021, citing the potential of the coronavirus-driven shift to ecommerce slowing down, as well as potential regulatory issues related to trans-Atlantic data transfers.
Facebook’s ongoing struggles with Apple were a cause for concern, as well, with Wehner expressing caution about “headwinds from platform changes, notably on Apple iOS 14.”
Williamson said, “Looking ahead to 2021, we expect that more advertisers will take a hard look at their reliance on Facebook and will ask themselves whether the environment is safe for their brands. But for now, heading into the all-important holiday season, Facebook’s financials look very strong.”
The company reported 2.76 billion monthly active users on Facebook as of Sept. 30, up 12% compared with the third quarter of last year, and an average of 1.82 billion daily active users in September, also up 12% year-over-year.
Wehner said MAUs and DAUs in Canada and the U.S. were down slightly from the second quarter of 2020 after spiking upward due to the pandemic, adding that he expected the slide to continue in those markets in the fourth quarter, projecting the totals to wind up flat or slightly down.
Across the entire Facebook family of applications, its monthly active people total of 3.21 billion as of Sept. 30 was up 14% year over year, while daily active people rose 15% year-over-year in September, averaging 2.54 billion.