Facebook’s ads cost more to run than its rivals
Updated February 08, 2020 08:48:25Facebook has launched a major advertising blitz for the first time, with a plan to sell advertising time on its sites to advertisers, according to a new report from financial analysts at RBC Capital Markets.
Key points:Facebook is looking to raise $50 billion to grow its businessThe report comes after it was revealed that it had spent over $50 million on ads in the US in 2017The new strategy is aimed at raising $50bn to grow the business Facebook is building in the UK and IrelandThe firm’s goal is to sell ads to advertisers by 2020The advertising market is expected to be worth $100 billion by 2020, but Facebook has a long way to go before that figure can reach $100bn, according RBC’s analysts.
That figure would be significant in the digital advertising world, which has historically been dominated by big players.
Facebook, the largest social network on the planet, currently has a $1.5 billion ad business.
While that’s a significant number, the advertising industry is expected be worth less than half that amount by 2020.
“Facebook has long struggled to deliver compelling, quality advertising, and has spent much of the last few years trying to convince advertisers that the company’s platforms could be a better place for their businesses,” said RBC analyst John Fournier.
“This new strategy will help them meet their advertising targets, and it will help Facebook reach a larger audience, as well as better engage with advertisers in new ways.”
Facebook has spent more than $50m on ads to date in the United States, the report said.
“These ads are coming at a time when the company is focusing on increasing ad revenue, particularly in the advertising market where it is the biggest player,” it added.
“But even as it attempts to compete with Google, Facebook has been under pressure from other major ad services, including Twitter and Instagram, to make significant changes to its approach.”
A number of social networks have come under scrutiny over their advertising practices, including Facebook, Instagram and YouTube.
Last month, the European Commission said it was investigating how Instagram and Google use their advertising platforms to target ads to users and what impact that has on competition.
“The new plan will help to address the issue of the lack of competition, as Facebook looks to increase its share of ad revenue in the market,” the company said in a statement.
“While there are many other companies doing the same thing, we believe this is the right strategy and we are proud of the way we are delivering ads to Facebook users.”
The strategy is likely to be one of the biggest financial headaches for Facebook.
In 2017, Facebook reported a $10.7 billion loss and a $3.4 billion loss in 2018.
The company has struggled to build a strong ad business for years, with revenue dropping as users increasingly turn to mobile platforms for advertising.
In 2016, Facebook lost $1 billion on advertising in the first quarter of its 2017 financial year.
In 2017, its ads were only offered for sale for about a quarter of an hour on Facebook, which had to resort to paid-for adverts to get users to spend the time on the site.
Facebook said it planned to increase ad time on sites such as Facebook Messenger and Messenger for people with low budgets.
It said it would also sell ads on Messenger to companies that had more expensive budgets.
In addition, Facebook is launching a program in the coming months that will give advertisers time to reach people with lower budgets by using the company website.
It’s also looking to buy out other social networks to grow and boost its ad revenues.
Facebook bought Instagram for $1bn in 2016 and is also looking at buying Snapchat.
In 2018, Facebook announced it had bought ad platform Instagram for a reported $1,700 million.
Facebook has also been pushing its own advertising products and services.
Last year, the company launched a new mobile app, which allows people to post their news, photos and videos directly on Facebook.