3Q Digital’s Q3 Facebook ads report: big increase in CTR, drop in impressions
Sources 1. http://www.insidefacebook.com/2014/10/28/3q-digitals-q3-facebook-ads-report-big-increase-in-ctr-drop-in-impressions/
2. http://www.marketwatch.com/story/facebook-coach-pfizer-earnings-in-focus-2014-10-28
Since the 3rd quarter annual report for Facebook was release, Facebook stocks have fell almost 10% from its all time high. The report indicated that cost of operation will go up in the coming years.
A large percentage of Facebook’s revenue comes from the advertisements. Facebook, one of the first websites to over come the problem of adblockers. Adblockers essentially removes all advertisements on a given page, thus removing the potential revenue the website’s owner can gain. Facebook have incorporated advertisements into the “News Feed”. Adblockers has no way of distinguishing between a user post and an advertisement.
Although Facebook is forecasting an increase of operating cost, its reports has indicted that the Click Though Rate on Facebook, has increased over 200 percent. This can potentially increase Facebook’s revenue by 200%, depending on how much advertisements is Facebook’s total income.
Even with the increase of operating cost, Facebook should be making huge profits from advertisements. It can be concluded that the market was over-sensitive to the increase of operating cost and did not take into account the vast increases in Facebook’s profitability through advertisements.