Facebook's Q2 Results and the Monetisation of Video

Despite the global growth of Facebook and the statistic that 50% of the online world is regularly logging in, we have still not reached ‘Peak Facebook’. Facebook still has room to grow, and their current strategy is to monetise video to attract the big advertising dollars from major corporations like Coca Cola.

Facebook wants to grow video content through partnerships with companies such as HBO, National Geographic and the New York Times. They are also setting up products such as LiveRail, Atlas and Audience Network for effective monetisation. We estimate that Facebook will account for 25% of video ad revenues in Europe by 2018.

At the moment, Facebook has been operating under the mantra ‘bring the audience in and the revenue will come’. So far that has worked, but to be successful, they have to monetise globally. Some 74% of revenue comes from North America and Europe, and only 35% of the audience is located there.

Data shows that the number of ads on Facebook has declined by 50%, yet revenue from ads has increased. This tells us that ads are becoming more valuable to advertisers. This is the opposite of what’s happening with Google. Google is still growing through increases in volume, as ad prices continue to decline.