May 3, 2017 / 10:38 PM / in 3 months

Even yellow flags can’t dent Facebook’s growth

3 Min Read

Facebook Founder and CEO Mark Zuckerberg speaks on stage during the annual Facebook F8 developers conference in San Jose, California, U.S., April 18, 2017.Stephen Lam

NEW YORK (Reuters Breakingviews) - Facebook’s idea of slowdown is more like a steady clip. The social network reported a striking 51 percent jump in advertising revenue, to $7.9 billion, in the first quarter. Instagram’s success with users is helping the team effort. Boss Mark Zuckerberg is adding 3,000 staff to police content after a spate of violent videos. He may need more to contain reputational risk.

For months Facebook executives have warned that ad spending would see a “meaningful” slowdown this year. That has yet to materialize. The year-over-year growth rate in the first three months of the year was down just 2 percentage points from the preceding quarter.

Instagram, with a visual canvas that’s attractive to brands, is probably part of the reason for the bump. The photo-sharing network has seen daily active users surge by 100 million over the past six months to 700 million. Facebook doesn’t break out Instagram’s advertising revenue though Chief Operating Officer Sheryl Sandberg said Wednesday that the product is one of the most important mobile-ad platforms for the $440 billion firm, alongside the flagship.

Executives renewed their warning of an ad slowdown, though. A pullback is likely as the company reduces the amount of advertising inventory in its network.

Other concerns may eventually weigh on growth, including how Facebook handles violent content. Last month, it took the social network several hours to take down two videos, one chronicling a killing in Cleveland, Ohio, and another a murder-suicide in Thailand.

Zuckerberg plans to almost double the number of staff keeping an eye out for questionable content, to 7,500. It’s unlikely to be the last such move. Members watched 100 million hours of video a day in early 2016, the last time Facebook disclosed that metric. That number has since grown since it launched live video later in that year.

For now, Facebook’s road looks wide open as it pursues Zuckerberg’s goal of building its community of nearly 2 billion users. The company even embraced the idea that stock-option compensation should fully be counted toward its costs, and stopped reporting adjusted numbers. Yellow flags can’t dent the speed.

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