Facebook on Wednesday continued its trend of posting huge advertising revenue growth, powered by its mobile business, but the company's outlook over its future "ad load" spooked investors.
Revenue for the third quarter was $ 7.01 billion, up 56% from a year ago, while mobile accounted for 84% of Facebook's advertising revenue, compared to about 78% a year earlier.
But some big questions loom. Here are the five most important takeaways for marketers from the company's conference call:
The specter of "ad load" troubles.
Increased ad load – or the the volume of ads users typically see in their feeds – has been a major driver of Facebook's advertising revenue growth. In July, the company signaled that ad load was nearing capacity, and on the latest conference call Facebook CFO Dave Wehner said the company's ad revenue growth rates will "come down meaningfully."
That's the kind of guidance that doesn't sit well with Wall Street, and despite an impressive quarter, shares of the company were down 7% in after hours trading.
Facebook can certainly drive ad revenue growth in ways other than just pumping more ad units in users feeds, like by getting current users to spend more time in the app or growing the user base even more. Still, the company wants investors to know that they shouldn't expect monster ad revenue growth figures to continue on the current path.
Blocking the ad blockers.
Facebook said in August that it will force users to view ads on its desktop website, even if they have ad-blocking software enabled. Though the company risked bothering users that are trying to avoid internet ads, the move appeared to help the company's top line. Desktop advertising revenue grew 18% in the quarter, compared to about half that growth rate in recent quarters, according to Mr. Wehner, who attributed that growth to "our efforts on reducing the impact of ad blocking."
Snapchat without saying Snapchat.
As part of the company's well-documented push into video, Facebook CEO Mark Zuckerberg said that Facebook now wants to focus on how its users actually share that content. "In most social apps today, a text box is still the default way we share. Soon we believe a camera will be the main way that we share," Mr. Zuckerberg said.
The company is experimenting with a new function in the Facebook app where the camera is just one swipe away from users' feeds. If that sounds familiar to you, you're probably a Snapchat user. Mr. Zuckerberg also touted that Facebook-owned Instagram's new stories feature, seen as a Snapchat competitor, has more than 100 million daily active users.
Facebook is still really huge – and really huge on mobile.
The company reported that its total monthly active user base grew to 1.79 billion people, up from 1.71 billion people last quarter. That's a pretty astonishing figure, but perhaps even more useful is the fact that Facebook, unlike many online services, also breaks out its daily active users. The company said that there were 1.18 billion daily active users on average in September 2016, a 17% increase from the year earlier.
Virtual reality bet.
Facebook has big plans for virtual reality, made clear when it bought Oculus for $ 2 billion in 2014. On the call Wednesday, Mr. Zuckerberg said the company was continuing its investment in the space.
"Since we believe the next phase of VR is great software experiences we're investing another $ 250 million in virtual reality content on top of the money that we've already invested," he said.
Write to Steven Perlberg at steven.perlberg@wsj.com
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