Facebook's Q1 earnings again show winning adblocking strategy

Last week, Facebook’s Q1 earnings call again confirmed that showing ads to adblockers is boosting profits:

Desktop ad revenue grew 22%, despite a decline in desktop usage, and was aided by our recent efforts to limit the impact of ad blocking technologies, which we began in Q3 of last year. David Wehner, Facebook CFO

Facebook took three steps in late-2016 to respond to adblocking on its platform:

  1. Listen to users’ grievances.
  2. Fix privacy, user experience, security, and bandwidth – e.g. using IAB LEAN standard display formats.
  3. Serve ads using tamper-proof ad serving technologies.

This approach benefits both users and advertisers, but is also helping Facebook to consistently grow ad revenue every quarter.

We reported last year that Facebook stood to make at least an extra $720 million dollars by showing ads to adblockers and that prediction appears to be on track.
Desktop advertising revenue was up 22% in Q1, the same increase as in the last quarter of 2016, but more than the 18% reported in Q3 of last year, when Facebook started showing ads to adblockers. Significantly, that 18% was already said to have been twice previous growth rates for desktop ad revenue – an increase that Wehner attributed to Facebook’s “efforts on reducing the impact of ad blocking”.
In terms of total revenue, desktop accounted for slightly less of the $7.9 billion in ad revenue in Q1, at 15% vs. 16% in the previous two quarters, with mobile making up the rest. However, that represents almost $1.2 billion in Q1 alone and shows that Facebook’s approach to adblocking is working. Even though it is inexorably losing share to mobile, desktop advertising should easily bring in the $4.72 billion we predicted.

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