Facebook says Q1 ad revenue was $25.4B, up 46% YoY, expects continued growth in Q2, with headwinds in H2 due to regulatory changes and Apple's iOS 14.5 update

The average price per ad in Q1 increased by 30 percent year-over-year, driving up Facebook ad revenue growth.

ZDNet 2021-04-29 Stephanie Condon

Context & Ripple Effects

Facebook’s earlier reports show an ad business that had already become predominantly mobile and continued to expand alongside its audience. In the same quarter, its broader results recorded 2.85 billion MAUs and a 30% rise in average ad price, tying the advertising result to stronger monetization rather than audience growth alone.

The company paired its Q2 growth outlook with a warning that regulatory changes and Apple’s iOS 14.5 update would weigh on the second half. Its later Q2 advertising report showed growth continuing, with ad pricing again rising faster than ads delivered.

First-order effects

Facebook enters Q2 with higher ad pricing supporting revenue growth, while its H2 outlook explicitly incorporates regulatory and Apple-related headwinds.
Advertisers buying Facebook inventory face a platform whose reported revenue growth is increasingly being driven by the price of ads rather than simply more ads being delivered.

Second-order effects

Facebook’s subsequent Q2 results, with average ad price up 47% and ads delivered up 6%, put greater focus on whether pricing can continue to offset the headwinds it identified.
Apple becomes a more material external variable in Facebook’s advertising outlook, alongside regulators, rather than merely a platform partner listed among its ecosystem relationships.

Third-order effects

Facebook’s reporting arc points to ad-platform performance being judged more on monetization yield—ad pricing alongside its large user base—than on user growth alone.
If regulatory and platform-policy changes persist, the durability of pricing power becomes a central differentiator for large ad platforms.

The trend: Large ad platforms are increasingly relying on revenue per user and ad-price gains to sustain growth as external platform and regulatory constraints become part of their operating outlook.

Discussion

@fboversight @fboversight on x
Sheryl Sandberg says they are working “...to mitigate the impact of the iOS 14.5 update.”
@ashk4n Ashkan Soltani on x
Telling that @Facebook's @sherylsandberg cites opportunities in @w3c when discussing their ‘regulatory roadmap’ on todays Q1 earnings call. #Bigtech has long known they can leverage standards groups to benefit their business goals. https://lumen.webcasts.com/...
@jason_kint Jason Kint on x
CFO works in short message about “headwinds” and transatlantic data transfer issues (Schrems II). This is all CYA and we've seen Facebook's history of downplaying risk so these mentions mean something big. /3 https://twitter.com/...
@eric_seufert Eric Seufert on x
Regarding FB earnings: CPM and ad load increases make sense given that 1) FB wanted to capitalize on COVID engagement that will wane 2H 2021 and 2) advertisers pulled forward 2021 spend before ATT launched. My sense is that both tailwinds remain in effect in Q2
@solarcycle_25 Ilsa on x
Hope Tim Apple kicks his ass. https://twitter.com/...
@swiftstories Mike Swift on x
Zuck's first shot at @apple on @Facebook #earnings call. With #AR and #VR “we're pioneering a much more open model of app store than what's currently available on phones today.”
@munster_gene Gene Munster on x
5) I've been skeptical on Facebook's long-term innovation potential. Zuckerberg's comments on the call regarding the company's focus on AR/VR gave me pause on my criticism, given I believe $FB will be one of two key players in this space, with Apple being the other with the lead.
@swodinsky Shoshana Wodinsky on x
@DylanByers sorry, the more accurate version is “earnings calls are a refreshing reminder that this scandal-laden company is also, somehow, more wealthy than god”
@jason_kint Jason Kint on x
Sandberg's answer on timeline of “headwinds” is irresponsible. They're allegedly breaking the law in Europe, CPRA takes effect 1/1/22, and outside of Apple, Facebook likely knows the most on the rollout of 14.5. It's their most valuable platform. Her answer is bogus. /7 https://t…
@richlightshed Rich Greenfield on x
All that fear, angst, anxiety and stress over #IDFA and the clear takeaway is the power of first party, on-platform data mitigates the risk pretty significantly listening to Facebook Q1 2021 earnings call https://twitter.com/...
@jason_kint Jason Kint on x
Zuckerberg *tries* to get in on the action by trying to answer a concern about Facebook's being beholden to other companies' platforms, taking a shot at Apple and then pivoting to AR/VR, small business and a seamless experiences where they've got all of your data. 🤦🏻‍♂ ️ /5 https…
@swodinsky Shoshana Wodinsky on x
@DylanByers so the scandals don't matter because they're,,,,,,,,,..., a wealthy monopoly?
@alexeheath Alex Heath on x
Zuckerberg opening the earnings call by talking about AR/VR. Said it accounts for the vast majority of R&D budget growth. R&D spend was $5 billion in Q1 alone. “We are going to keep investing heavily” in “building the next computing platform.” Investors still don't get this.
@jason_kint Jason Kint on x
If Facebook sends out a memo, it's unnecessary to publish it...my two cents. Regardless, this is inverted propaganda for ad clients. Apple's change makes it harder for FB to collect most of its data, increases fatigue across its interest harvesting so it has less ad transactions.…
@patrickcoffee Patrick Coffee on x
Memo from Facebook to agencies and advertisers details how Apple's privacy changes will affect their campaigns from me and @LaurenJohnson https://www.businessinsider.com/ ...
@slpng_giants @slpng_giants on x
@DylanByers Yes, of course. They crush their quarterly earnings and everything, but it's kind of small potatoes when you consider that their scandals can, like, topple democracy and cause genocide.
@jason_kint Jason Kint on x
Full context for those clips. Sandberg did her normal mom and pop song mixing in vaccine heartstrings. India is a bit much considering FB suppressed Modi protesting today. Again gaslights to confuse FB's tracking and surveillance business model as simply “personalized ads.” /2 ht…
@jason_kint Jason Kint on x
78 seconds. Listen closely. Apple has kneecapped Facebook pushing out an update fo 1+ BIL devices. Remember: 1) in no way does this update stop personalized ads, it stops surveillance 2) a majority of Facebook's data is collected when users aren't on its services (surveillance). …
@sarthakgh Sar Haribhakti on x
It is both true that iOS changes will be a boon for them (bcs of first party data, its where people are) & that it is a risk Ad tracking is not just about FB. Its publishers too (including the NYT which tracks me everywhere). It hurts them them but less compared to others. https:…
@jason_kint Jason Kint on x
Sandberg gets good question about share shift from their loss of data, tries to again gaslight this impacts all personalized ads (it doesn't), ignoring local media options available then, probably realizing she can't say they'll be better off than everyone, notes platforms! /6 ht…
@profcarroll David Carroll on x
I do fear Sheryl means it's time to raid the Cabinet of Patented Dystopias. https://patents.justia.com/... https://twitter.com/...
@jason_kint Jason Kint on x
Analysts, to their credit, did ask some questions about iOS. Here is first CFO answer: Pivots through small business effects and then an attempt at broader antitrust scrutiny for Apple trying to claim privacy and “open internet” crown which is 😂 coming from closed Facebook. /4 ht…
@jason_kint Jason Kint on x
Super well covered on Facebook / Apple drama. Love an academic is now using my #KneecapFacebook characterization which analysts are sleeping on but I've open sources. Only one clarification point from me. 1/3 https://www.theguardian.com/ ...

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