Facebook's growth appears to know few limits. And even when one source of growth is set to slow down, the social network is ready with another.
The Silicon Valley firm on Wednesday reported blockbuster second-quarter earnings, with strong increases across almost every measure.
Facebook said sales totalled $6.44 billion for the quarter, up 59 per cent from a year ago, while profit almost tripled to $2.06 billion.
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The rise was driven by strong mobile ad sales, as well as a steady ascent in its number of users.
Facebook now counts 1.71 billion monthly active users, up 15 per cent from a year ago.
And in a sign of how indispensable the social network is to people, the amount of money the company can squeeze from each user globally jumped to $3.82, up from $2.76 a year earlier.
In the United States and Canada, Facebook's most valuable markets, the company makes an average of $14.34 per user. The performance made Facebook a bright spot in a mixed field of technology company earnings this month.
On Tuesday, Twitter, once seen as a social media rival of Facebook's, posted weak second-quarter earnings, including decelerating revenue growth and only a small increase in users.
To maintain its rocket-ship trajectory and to avoid the pitfalls of its counterparts, Facebook said it was also looking ahead and betting on what it hoped would be a major business driver in the years to come: video and video advertising.
"We see a world where video is first, with video at the heart of all of our apps and services," Mark Zuckerberg, Facebook's chief executive, said in a conference call with investors.
Facebook also acknowledged on Wednesday that it could not just keep cramming more ads onto the site, something known in industry parlance as the "ad load."
Instead of increasing the number of ads in people's News Feeds, Facebook plans to sell more video advertising, which commands a premium.
Other companies, like Twitter and Snapchat, have also said they will pursue this strategy, which has long been a mainstay of YouTube, Google's powerhouse video site.
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Facebook has been methodical about its transition to a more video-centric network. In recent years, it has introduced new tools to let people easily capture and post videos to the site, including uploading so-called native video directly to Facebook, which hosts the content itself.
More recently, Facebook Live, the company's streaming video offering, allows people to broadcast and post live videos of themselves directly to Facebook in real-time. The company has struck deals with major media companies and publishers like BuzzFeed and The New York Times to produce live content exclusively for Facebook; Facebook pays The Times for some of the live content.
The more acclimated users are to seeing video content on Facebook, the thinking goes, the less disruptive it will be for people to view video ads alongside them.
The push is already paying off. Facebook on Wednesday said users spend more time on the network as a result of the increase in video content posted to the site.
"Think about what video looks like on Facebook. The most effective video ads are really built for social," Sheryl Sandberg, Facebook's chief operating officer, said in an interview. "We see even better engagement with videos that are actually put together for Facebook."
Facebook has shown it is skilled at adapting to new ad formats and industry trends. As people moved away from desktops to smartphones en masse five years ago, Facebook quickly shifted its advertising business to focus on mobile sales. Today, mobile ads constitute roughly 84 per cent of Facebook's overall advertising revenue.
"Three or four years ago, the single most important trend to figure out on the internet was mobile," said Mark Mahaney, an analyst from RBC Capital Markets. "These days, the single most important trend to figure out on the internet is video. And from a financial perspective, it seems like Facebook is figuring out the video-fication of the internet better than anyone else."
Zuckerberg foresees a future where Facebook is far more advanced in video than simply automatically playing them in the News Feed. He has tasked his top lieutenants to work on virtual reality and 360-degree cameras, which will aid videos and protect Facebook against fading into obscurity.
"Just as people used words and text to express themselves in the past, in the future more of that is going to be video," Zuckerberg said. "And more of these augmented-reality tools are going to be an important part of delivering that experience."
©2016 The New York Times News
