Facebook Closes the Gap on TV Advertising

May 09, 2017

Research released by Ampere Analysis reveals that Facebook is closing the gap on TV advertising. The average revenue per user (ARPU) generated by Facebook advertising has grown six-fold in North American and four-fold in Europe in five years. By comparison, the value of a TV viewer has remained relatively flat, with a growth of less than 7% in both regions over the same half-decade.

At present, it is Google that is closest to TV on the ARPU measure. According to its analysis, Ampere estimates that worldwide, Google currently makes about $7 each quarter for each monthly active user (MAU) from advertising on its sites. So, it really isn't far behind TV, where the average viewer is responsible for between $10 and $11 of advertising revenue per quarter.

In contrast, Twitter has been struggling to grow its revenue per MAU, which is fairly stable at about $2. Snapchat has been the big success story of recent quarters. Although it lags other players in terms of revenue per MAU, Snapchat has been very active in beginning to monetize its customer base more aggressively. It has increased revenue from practically $0 per quarter per MAU to $0.70 in less than two years.
What’s Fuelling Facebook’s Rapid Growth in TV Advertising?

In the US, Facebook’s advertising ARPU grew from $3.30 per quarter in 2012 to over $19.80 in 2016. In Europe, it increased from $1.45 in 2012 to $5.86 in 2016. Expressed relative to TV advertising, in the US, the value of a Facebook viewer has increased from 7% of the value of an average TV viewer in 2012 to 40% in 2016. The growth has been greater in Europe, with Facebook advertising’s ARPU growing from a 14% proportion in 2012 to 53% in 2016.

One of the factors fuelling this rapid growth is video advertising and the higher CPTs (cost per thousand impressions) associated with video commercials. In 2014, Facebook announced the international launch of auto-play video adverts and began transforming its service into an online video marketing platform for advertisers.