How Facebook’s last year shows dominance in mobile advertising

There’s plenty of shiny toys to look at when it comes to Facebook Oculus Rift, WhatsApp, Messenger and ambitious plans to bring the internet to every corner of the globe.

At its core, however, is good old advertising. Well, maybe not old.

“Were going to pursue any avenue we can to help business owners, all within the bounds of privacy control,” said Andrew Bosworth, Facebook’s vice president of ads and business platform. “Consumers need to feel comfortable. If we ever creep anybody out weve done a poor job.”

Ahead of Advertising Week 2016 in New York, Mashable spoke with Bosworth to learn how Facebook has grown in digital and mobile advertising and what the team is creating next.

The world’s largest social network brought in $17.9 billion in revenue last year, up 250 percent from 2012. The company’s big bet on mobile has paid off with 84 percent of its advertising revenue coming from mobile ads last quarter.

“When you look at paid social on Facebook, its really one of the most efficient digital vehicles that you have at our disposal,” said Janice Suter, director of social media at ad agency GSD&M.

Facebook isn’t done building support for more business, and it isn’t done maturing. In the last year, the company has had its greatest momentum in advertising, Facebook and clients told Mashable.

Facebook delivered monthly product changes to improve measurement, provide more creative experiences and drive sales, especially on mobile. Advertisers now, for example, can measure who has viewed a video with sound, create a 360-degree video and track if an ad sent someone to a brick-and-mortar store.

The growth isn’t without bumps, as advertisers evaluate what works for them and Facebook learns from mistakes. Facebook also shut down FBX, its real-time bidding ad exchange, and LiveRail, its ad server.

“The challenge that Facebook is undergoing in terms of effectiveness is more everyone having an understanding of its capabilities and also its limitations,” said Larry Lac, director of social marketing at Havas, one of the world’s largest ad agencies.

For instance, Facebook has been heralded as a tool for sophisticated targeting to consumers yet in August consumer goods giant Procter & Gamble announced it would scale back on such narrowed targeting, Wall Street Journal reported.

Facebook has prioritized video, and yet, the company was forced to publicly apologize Friday after another Journal report cited advertiser’s anger over a misrepresented video metric that inflated results, overestimating average time spent watching videos by between 60 to 80 percent.

The ‘Boz’ story

Bosworth, more commonly known as Boz, joined Facebook in 2006 and was a co-developer of News Feed. He dedicated proceeding years to creating more consumer products on the big blue app until Facebook CEO Mark Zuckerberg asked that he move to advertising in 2012.

“I was reluctant [to accept] is the truth,” Bosworth said. “It was going to be a three month gig or six months gig and then the plan was for me to move on to do something else after that.”

For those first three months, Bosworth set a goal to take Facebook’s advertising on mobile devices where more half of Facebook users were already using the service from $0 to “not $0,” he said. He did.

But despite the success, Bosworth hasn’t left Facebook’s advertising team. “I was surprised by how much I really enjoyed it,” he said. Whats kept me here has been the opportunity I see. I think theres a false dichotomy between people and businesses.”

The new pitch

In 2014 at Advertising Week, Facebook pitched its strength with “people-based” marketing. In 2015, the company claimed its network rivaled television given its daily mobile audience size which has grown to 1.03 billion and introduced TRP (targeted rate point) buying to help TV advertisers translate campaigns across platforms.

This year, Facebook is framing its offerings as providing “brand equity,” Bosworth said. “We’re trying to move beyond this idea of TV as a medium but more in what was the value TV created that marketers want to recreate on the mobile phone.”

“We’re trying to move beyond this idea of TV as a medium but more in what was the value TV created.”

The understanding of value is crucial given companies confidence in traditional television and reluctance toward digital.

“We need more information to be able to influence where those budgets go,” Suter said. “At the end of the day, our clients are comparing the efficiency of Facebook ads or a banner ad, even comparing it to television or radio or print.”

More measurements

Facebook has focused on how brand marketers buy and measure, especially in their video products. Facebook counts a video view as three seconds, but advertisers have the option of paying for 10 second views.

In August 2015, YouTube creator Hank Green accused the network of deception in their statistics in a blog post titled “Theft, Lies, and Facebook Video,” arguing that Facebook’s three second statistic intentionally inflates its number.

“I think Facebook is incredibly transparent in terms of how we measure,” Bosworth said when asked about Green’s post. “In 2015, we only just really launched our video platform so I admit the measurement tools were kind of rudimentary to start with. They really developed when we matured a lot over the last year.”

Bosworth did not mention nor was Mashable aware of the recent video metric error when interviewed last week.

When asked about the particular incident, Bosworth said in an emailed statement, “Our goal is always to help advertisers figure out what is working and what is not. That means offering a number of different video-related metrics and continuously improving our measurement offerings as weve done throughout the past year.

In February, Facebook partnered with several third-party verifications companies, including Moat, to provide more data in viewability.

“Theres a lot of attention paid to this single point of a view, but of course, the measurement interactive gives a much richer story,” he said in the sit-down interview.

Beyond video, Facebook has worked to improve measurement of both online and offline sales. In June, Facebook added store locator where advertisers could show a nearby location and the site could then track store traffic.

Creative formats

Facebook’s News Feed has not changed much in its layout, but the posts within it have. This year, Facebook introduced two new ad units and expanded the capabilities of others.

Canvas is a unit similar to Instant Articles. It allows advertisers to include videos, maps, soundbites and call-to-action buttons in a full-screen, vertical display. With 360-degrees videos, advertisers can create an immersive experience with one image.

Carousel, launched in 2014, now allows advertisers to display photos and videos in a horizontal format that users can swipe.

Advertisers are still hesitant to use the products, however.

“A big point of discussion this year has been Canvas, what that is and how clients are using it, is it actually having a positive impact on user experience? We think its going to be valuable in the future,” said Torrey Taralli, head of social at mobile ad agency Fetch.

Indeed, the Canvas ad unit requires more time and creative effort than other units, and the format is designed exclusively to Facebook. That could change.

“One of the aspirations we have is to make sure marketers can reuse that Canvas on Instagram, messenger and over time maybe even on WhatsApp or the Audience Network. Theres a degree to which you start to be able to change the math in terms of the return on investment,” Bosworth said.

Facebook opened up Instagram to advertisers last fall, and now boasts 500,000 advertisers on the photo- and video-sharing app. For comparison, there are more than 3 million active advertisers on Facebook.

Instagram offers 30-second and 60-second videos and photo ads.

Facebook does not break out the revenue between the core app and Instagram, but Credit Suisse estimated it will generate $3.2 billion in revenue for this year and grow to $5.3 billion in 2017.

For advertisers, spending on Instagram is easy and understandable once a client already knows Facebook.

Making sales

With 3 million active advertisers and more than 1 billion daily active users, Facebook is becoming a crowded space.

Its new ad pitch comes at a time when publishers on Facebook have seen their reach via their Pages decline, especially over the last 18 months. Some publishers understood that, and so does Facebook.

“With Facebook you dont really own the space. You rent. Youre at the mercy of the changes, the algorithm,” Suter said.

One of the biggest changes Facebook made is introducing dynamic ads, which allows retailers to upload product catalogues to the site, which are then tailored based on a user’s site visits. That offering has worked well for retailers and also travel industry clients. For instance, Fetch used dynamic ads on Facebook to drive app installs to Travelocity’s app.

They’re not after any particular industry. “I want the dollars that are going to work. The best way to grow our business for a good long time is to make sure that if they do spend money for us, its a good experience for them,” Bosworth said.

Same goes for the user. Facebook users can also better control the type of ads that they see. Over the last year, Facebook has been in a battle with the ad blockers. While improving the tech to eliminate the functionality of the ad blockers, Facebook is also pushing its newly-released ad preferences as its answer.

“I dont see any way to get there if we dont give people a voice in terms of how they want to be communicated with,” Bosworth said.

The “ad preferences” page lets users see their interest Facebook identified which advertisers can then target their ads around. Users can actively choose to hide any of these categories, which include political leanings.

What’s next

Facebook has developed itself into an advertising giant, competing with Google for digital dollars and aiming to take a cut from TV budgets. That’s how the technology company, for the most part, justifies its $370 billion market capitalization, pays its nearly 15,000 employees and funds new ventures.

Now, Facebook is financed primarily from mobile devices, and they aren’t done with harnessing that power, according to Bosworth.

“I think well expect to see a much larger activity for local businesses. The mobile phone is nothing if not a portable device that we can take with us anywhere. I dont think anyones taken full advantage of that and I think Facebook is well poised,” Bosworth said.

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