SMB Ad Spending on Facebook in Q4 Likely at Least $2 Billion
January 28, 2016 | Contributed by: Greg Sterling
Yesterday Facebook announced very strong Q4 and full-year results, beating analyst revenue expectations. The company had roughly $5.6 billion in quarterly ad revenue, 80 percent of which was mobile advertising. In all of 2015 the company made just under $18 billion in top-line revenue.
Previously Facebook announced “over 2.5 million active advertisers.” Presumably that number is larger today. Facebook also said that “over 50 million small businesses [are] now actively using Pages.” Another interest statistic from the Facebook earnings call yesterday (per COO Sheryl Sandberg) was: “people post more than 2.5 billion comments on these Pages each month.”
While Facebook doesn’t break out advertisers by market segment or spend, it’s safe to assert that at the very least a million of the company’s 2.5 million advertisers qualify as SMBs. Below is the company’s total revenue by region. Roughly half of revenue came from US & Canada. That’s equally true for ad revenue.
The company sees a massive opportunity in converting more of the 50 million SMB Page users into advertisers. This is where huge revenue growth for Facebook may come from in the next five years.
Many small businesses appear ready to embrace Facebook advertising. That’s reflected in our social media data and anecdotal comments from business owners at our LSA Bootcamps. Beyond this, a 2015 survey of small business from BIA/Kelsey reports that 20% of SMB survey respondents have used Facebook advertising.
If all of Facebook’s 2.5 million advertisers were spending equally on the site it would amount to just over $2,000 per advertiser annually. Of course that’s a fiction. But it’s probably safe to estimate that SMB spending on Facebook is at least $2 billion in Q4.
And that’s probably a conservative estimate.