Tip Tuesday: How to Apply an Earnings Report to Your Marketing Strategy

Tip Tuesday: How to Apply an Earnings Report to Your Marketing Strategy

Facebook is set to release their fourth-quarter earnings Wednesday after the closing bell, and unless you own stock in the company, you most likely won’t be sitting on the edge of your seat waiting to see the results.

However, if you are a business owner or marketing manager and you have been on the fence about Facebook advertising—especially given the recent problems they’ve been having with inaccurate advertising data, then maybe you need to pay attention to the report. Keep in mind that your focus isn’t necessarily the numbers themselves so much as dissecting those results, applying them context and then converting them into actionable marketing strategy.

To get a better idea of what to expect from tomorrow’s earnings report, let’s dig into some of the more interesting numbers Facebook reported in the third quarter of 2016 in its last earnings report:

  1. Facebook raked in $5.7 billion from mobile ads, up 70 percent year-over-year.
  2. That $5.7 billion comprises almost 84 percent of Facebook’s total ad revenue.
  3. Facebook has over 4 million active advertisers.
  4. Facebook has over 60 million active small and mid-sized businesses (SMBs) on the platform—of which 85 percent are active on mobile.
  5. Instagram now has more than 600 million users.

What lessons did we learn from this earnings report?

  1. If you are a business-to-consumer (B2C) company, you need to devote a good percentage of your ad spend to a Facebook mobile campaign. Or, at the very least, a re-targeting campaign. Odds are, your competitors are already doing so.
  2. The jury is still out on Facebook as a business-to-business (B2B) advertising platform. B2B traffic still favors desktop over mobile by 70 percent. That said, I still recommend all B2B clients have some exposure to Facebook re-targeting.
  3. Prices for Facebook advertising are still relatively reasonable. But we predict it will not be long before Facebook faces the same issues Google is currently. Google’s ad revenue for 2016 topped $19 billion, but they’re literally running out of room for advertisements on the Search Engine Results Pages (SERPs) and demand is outpacing supply. I think Facebook will figure out ways to create more real estate and will do it more efficiently than Google. It’s already started happening within the Facebook Messenger app.
  4. Facebook is an optimal platform for SMBs to interact directly with both current and potential customers. If you’re not leveraging Facebook as a tool to reach out to your audience, you’re making a huge mistake. Even if you must reallocate resources from other advertising mediums, you need to make Facebook a major part of your digital marketing strategy. It’s no longer optional.
  5. With an audience that large, Instagram also warrants a good chunk of your marketing budget, especially for B2C clients with retail or e-commerce sites.

What are we likely to learn from tomorrow’s earnings report?

In addition to the hard numbers we’re referencing here, another important aspect of an earnings report is the business’ guidance for the next quarter. This represents the company predicting results for the upcoming quarter. If growth is expected to continue trending upward, they’ll likely share what their reasoning for that might be. One of the most common sources of optimism for an upcoming quarter is new product offerings.

We think that Facebook is bullish on new products like Facebook Live and midroll ads and will do all they can to encourage users to try these new features. If you can get out in front of these, you might just find yourself with an advantage over your competitors who are more slow to adapt to new technologies.

Earnings calls may seem dry and pointless to anyone who isn’t a shareholder, but as a marketer there’s a lot of useful information that can be extrapolated from these quarterly reports if you’re willing to do a bit of digging.

Len Ward is the president of Commexis. He has over 20 years’ experience in investment banking, startup e-commerce, and digital marketing.

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