Sheryl Sandberg has seen the future for small businesses, and it is video advertising.
That was one key takeaway from the Facebook’s chief operating officer during the social media giant’s first quarter earnings call for 2015 on Wednesday.
Currently there are 30 million small business pages on Facebook, Sandberg said. And that number continues to grow every quarter. Facebook also now boasts 2 million active advertisers.
“We have an opportunity to turn those businesses into advertisers and marketers, and that's what we've done successfully and we're going to continue to focus on that,” Sandberg said.
More specifically, in the quarter, Sandberg said, more than 1 million small business owners have posted videos to Facebook, and "done really small ad buys around them." (A Facebook spokeswoman said the posts were a combination of paid and "organic" content.)
“That's pretty cool because I don't think there are probably 1 million advertisers who have bought TV ads in that same period of time,” Sandberg said.
Video is an increasingly important area of focus for Facebook as a potential key driver of advertising revenue, including on Instagram, which Facebook bought in 2012 for $1 billion. Instagram has 300 million active users who spend an average 21 minutes each day on the site, Mark Zuckerberg, chief executive of Facebook said on the call.
And the trend is increasingly toward mobile devices, as 75 percent of Facebook video views occur on mobile devices, Sandberg said. She added that Lionsgate recently promoted its film the Age of Adaline by targeting young women on Instagram. She also pointed to Hillary Clinton’s video announcing her intention to run for president, promoted on various social media channels including Facebook and YouTube, which got 2.7 million views.
In the quarter, Facebook had 4 billion daily video views, which Zuckerberg called a company milestone. (Facebook did not break out the number of video views in previous quarters.) Also in the quarter, Facebook launched an embedded video player, which allows videos to be viewed on third-party websites.
“Supporting new types of content like this is an important part of preparing for the future of how people want to share,” Zuckerberg said.
Industry observers agreed that video and other forms of multi-media advertising are indeed the future for small businesses through low-cost channels like Google and Facebook.
“Many small businesses aren’t advertising as they did before, which was in the yellow pages, on billboards, and through paper flyers, they are migrating online” said Shyam Patil, an analyst for Wedbush Securities "¨in Los Angeles. “And Facebook can do targeted ads by geography, so it is a great direct response channel opportunity for small and mid-sized businesses.”
But just because you build it, small businesses won't necessarily clamor to pay for ads. And that could increase profitability challenges the social media giant is already experiencing.
Facebook's advertising revenue in the first quarter fell nearly 8 percent compared to the fourth quarter 2014, although year over year, ad revenues increased 46 percent. Profit for the quarter also decreased, 17.6 percent to $933 million compared to the fourth quarter, and decreased 13 percent compared to the first quarter 2014. Nearly 75 percent of Facebook's advertising revenue comes from its mobile channel, Facebook reports.