When it comes to advertising, small screens are the new big screens.
This is what Facebook FB +1.08% chief operating officer Sheryl Sandberg says the company’s latest milestone — announcing 4 million advertisers on Tuesday — signifies about the growing importance of mobile to consumers and marketers. And while the majority of advertisers on Facebook are small- and medium-size businesses, Sandberg said many small businesses still need to catch up.
“This is a big announcement for us — 4 million advertisers,” Sandberg said in a phone interview. “We think it’s another proof point of the story we’ve seen for years, which is the move to mobile.”
Mobile dominates Facebook’s advertising engine. In the second quarter, mobile advertising made up 84% of total sales in the quarter, up from 72% in the same period a year earlier. Mobile ads, in particular, mobile video formats, have been key to driving Facebook’s impressive revenue growth.
The company’s global ad revenue is expected to total $23.31 billion this year, says forecasting firm eMarketer, making Facebook the largest ad publisher after Google. Facebook has also found success offering mobile ad campaigns across its flagship app and Instagram, which is forecast to generate about $1.5 billion this year, thanks to the app’s popularity among millennials. Facebook first announced 3 million active advertisers just six months ago.
“You’re seeing our accelerating pace of growth, and what this shows is this is working,” Sandberg said. “We’re delivering results for small businesses and helping people connect with customers where they are, which is on mobile.”
Sandberg described mobile devices as “the fastest adoption of a consumer communications technology the world has ever seen,” noting that Facebook’s biggest opportunity lies in small businesses.
“The small screen is now big, because the small screen can do big things,” Sandberg continued. “This is now a really important place to reach customers, both because this is where customers are, but also because this is an exciting creative canvas.”
Sandberg noted that while 60 million businesses around the world are active Facebook Page users and the majority of Facebook advertisers are small- and medium-sized businesses, a significant number of small businesses struggle to manage their online presence. A third of small businesses in the U.S. don’t have a web page — and standalone mobile apps are even harder to build and get people to visit.
“While the small screen creates opportunity, it’s actually pretty hard for small businesses,” Sandberg said. Facebook has intentionally made business Pages as easy to start and maintain as personal Facebook profiles, especially on mobile devices, as many business owners manage Facebook Pages and ad campaigns on-the-go, the company said.
“We’ve worked hard to make our ads very easy to use, very simple, low cost and high ROI,” Sandberg added.
Facebook’s VP of global SMB Dan Levy said a top priority for Facebook is capturing the investment of small businesses that already have active Facebook Pages but don’t yet buy ads on the platform. Part of Facebook’s strategy is to make Pages as valuable as possible for businesses, even before they consider ad campaigns, Levy said.
“What I hear from small businesses around the world is their time and their money is precious, and we want to be the best minute and the best dollar that they spend every day,” Levy said. “We want to be number one growth driver for their business.”
Levy said Facebook is the “leading place” to run a video ad campaign as a small business. He said the number of advertisers using video ads is seeing “great growth” — as consumers seek more video content, they come to expect more video ads, he said. Levy said more than 20% of Facebook’s advertisers — about 800,000 businesses — have created a video ad in the last month, creating about 4 million video ads during that period.
“Video is a great chance to engage with sight sound and motion, and mobile is opening up new opportunities,” Levy said. “Over the past five to 10 years, only a fraction of those businesses could create a video ad because of the expense and technology required. Now with just a phone and a few simple tools, they can create compelling ad content to drive their business forward.”
Facebook said its fastest growing region for advertising is South East Asia, and its top five countries based on year-over-year growth are the U.S., Brazil, Vietnam, Mexico and the U.K. More than 85% of active business Pages use mobile, and 40% of active advertisers have a created a Facebook ad on mobile, the company said. The large majority of Facebook advertisers are outside of the U.S.
Last week, Facebook apologized for overestimating the average viewing time for video ads on its platform for two years. Facebook said that its metric for the average time users spend watching videos was inflated because it only considered video views of more than three seconds. Facebook said it was launching a new metric to address the problem. In a post on Facebook, the company’s VP of advertising and global operations David Fischer said Facebook takes “any mistake seriously” and that the error “has not and will not going forward have an impact on billing or how media mix models value their Facebook video investments.”
“This error should not stand in the way of our ultimate goal, which is to do what’s in the best interest of our partners and their business growth,” Fischer said in his post.