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Majority of Facebook’s $3.8 Billion in Q2 Ad Revenue from SMBs

Facebook just announced its Q2 2015 earnings. Total revenues were $4.04 billion. Of that just over 94% were generated by advertising. About half of all revenue came from the company’s US and Canadian markets.

Mobile advertising grew from 62% of total ad revenue in Q2 2014 to 76% this quarter. Daily mobile users were 844 million and monthly mobile-only users were 655 million. Total monthly active users were just under 1.49 billion.

In February of this year Facebook announced that it had 2 million active advertisers. This active advertiser base consists mostly of small businesses. The current active advertiser number is probably considerably higher now.

But using this 2 million figure and the company’s just-announced $3.82 billion ad revenues for Q2, I calculate that each advertiser was worth roughly $1,910 on average this quarter. The value of US and Canadian advertisers as a practical matter is going to be quite a bit higher than those in developing markets.

While these averages are artificial all this means that well over a million SMBs are spending thousands of dollars on Facebook annually.

Remarks from the earnings call:

There were a number of comments made during the earnings call about SMBs. Facebook COO Sheryl Sandberg reaffirmed the numbers above: 40 million active SMB pages globally (though the Facebook ad platform says 56 million) and “more than 2 million” advertisers.

She implied that Facebook was the only advertising platform or channel that SMBs needed and gave examples accordingly. She said that Facebook isn’t yet “simple enough” for most SMBs (“but nothing is simple enough”). However she quickly added that Facebook is the easiest of all the digital advertising platforms “out there” to use.

Perhaps most striking of all, Sandberg said that “Over 1 million SMBs have posted a video on Facebook.”

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