Facebook is Really, Really Good at Advertising
MarketFoolery
The Motley Fool
4.7 • 1.7K Ratings
🗓️ 29 July 2021
⏱️ 20 minutes
🧾️ Download transcript
Summary
Facebook’s 2nd-quarter revenue growth was driven by its ability to charge more for ads. PayPal’s 2nd-quarter payment volume grew 40%, but shares sell off due to concerns related to eBay. John Rotonti analyzes those stories, iRobot’s 2nd-quarter results, and which companies have (and don’t have) the ability to raise prices.
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Transcript
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| 0:00.0 | It's Thursday, July 29th. Welcome to Marketfoolery. I'm Chris L. With me. First time in a while, |
| 0:08.5 | it's John Ratante. Thanks for being here. Thanks Chris. Glad to be here. We got more earnings. |
| 0:14.4 | It's one of those weeks. We're going to talk PayPal. We're going to talk I rule about. We're |
| 0:19.5 | going to start with the social network. Facebook's second quarter revenue came in just in north |
| 0:24.2 | of $29 billion. It's interesting because Facebook's, it's not like their ad inventory is getting |
| 0:32.0 | dramatically larger, but they've demonstrated their ability to charge more for ads. |
| 0:39.0 | And you got to like that kind of pricing power if you're a shareholder. |
| 0:44.3 | That's exactly right. So their revenue grew 50% constant currency in the quarter, |
| 0:50.6 | 6% of that top line growth, 6% came from growth in the number of ads or the number of impressions, |
| 0:58.6 | but 47% increase in the price per ad. So like you said, that's a lot of pricing power. |
| 1:06.7 | And on some level, it does show that businesses of all sizes, excuse me, are willing to pay |
| 1:12.5 | Facebook more for better ad placement, higher ROI, higher return on their ad spend and then better |
| 1:21.4 | more effective measurement of the effectiveness of those ads. So they're willing to pay Facebook |
| 1:27.2 | more. I know Facebook gets a lot of attention for a lot of other things that have nothing to do with |
| 1:33.0 | advertising. And I think it's easy to lose sight of the fact that they're really, really good at |
| 1:40.9 | this. In the same way that Google is really good at search, Facebook is really good at the |
| 1:45.9 | business of advertising. I think they're the best at the business of advertising. In my opinion, |
| 1:50.4 | I think they're the best. So how big is the Oculus for them? And for those unfamiliar, |
| 1:57.2 | this is their virtual reality goggles headset as someone who is watching a decent amount of |
| 2:04.5 | the summer Olympics. I'm seeing a lot of ads that Facebook is doing for the Oculus and it seems |
| 2:11.6 | like this is something they are very serious about from a business standpoint. It's not just, |
| 2:19.6 | oh, this is a fun thing to play with. It seems like the business aspirations around Oculus |
... |
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