Facebook reported Q4 2019 and full year 2019 results on 30 January 2019. Full year advertising revenue grew 27% year-on-year to $70 billion, in line with the company’s total revenue which grew 27% to $71 billion.
In 2019, US & Canada was its largest advertising market by revenue, generating $33 billion, followed by Europe at $17 billion. Asia Pacific and the Rest of the World generated $13 billion and $7 billion respectively.
Ad impressions served across all services grew 31%, driven mainly by Facebook News Feeds, Instagram Stories and Instagram Feeds. However, average price per ad decreased by 5%; this was caused by the impact of geographies that generate lower rates and the ongoing shift towards ads on Stories.
In Q4 2019, the company reported 2.5 billion monthly active users (MAU), an 8% year-on-year growth. Asia Pacific represents 42% of the total MAU, followed by the Rest of the World with 33%. US & Canada and Europe represent 10% and 16% of the MAU respectively.
Facebook has also started to report app usage statistics in combination under the Family Monthly Active People (MAP) metric., The metric measures a registered and logged-in user of Facebook, Instagram, Messenger, and/or WhatsApp who visited at least one of these products in a month. In Q4 2019, there were 2.9 billion MAP, a 10% year-on-year growth.
During the results call, Facebook highlighted the company’s focus on election integrity and privacy control for 2020, adding that it was determined to prevent foreign interference in this year’s political advertising on the platform.
Facebook’s 2019 full year result reflects robust growth potential in Asia Pacific and the Rest of the World. These two regions are the smallest in terms of MAU; however, it grew healthily by 11% and 9% respectively. The ARPU in these two regions is relatively low compared to the more mature markets of the US and Europe. According to our calculations, 2019 advertising ARPU in Asia Pacific was $15 and $11 in the Rest of the World. This compares to $130 in the US. Given the gap, we believe there is ample room for the social media company to grow its advertising revenues from increasing ARPU in Asia Pacific and the Rest of the World.
The increased ad impression across all services imply that more online video ads inventories will be created to monetize the service, especially in Asia Pacific where online video is a key driver. IHS Markit Advertising Intelligence Service forecasts Facebook’s online video revenues in Asia Pacific is set to grow 83% from $1.8 billion in 2019 to $3.4 billion in 2023. In Europe, online video revenues are forecast to grow 35% from $3.2 billion to $4.4 billion over the same period.
We also expect to the integrations of Facebook’s family of products with payment and commerce services such as Whatsapp Payments, Facebook Pay and Instagram Shopping to drive advertising revenues as more business users convert into advertisers. During the results call, the company announced that it currently had 140 million business users globally but only 8 million (6%) of them were advertisers. The full integration of payment/commerce services across its services will be an attractive proposition, especially in markets with low credit card penetration such as India and Indonesia.
While the outlook for company revenues is positive, Facebook needs to put in place data protection measures to reduce the impact of incremental privacy regulations and ad targeting data concerns. Following the Cambridge Analytica-Facebook data scandal, which involved data breach millions of Facebook users for political advertising, the 2020 election will be an important event for Facebook to demonstrate high standards of election integrity and transparency. The company recently rolled out a Privacy Checkup tool to enable users to clear Facebook activity history, and we anticipate more measures to follow.