Facebook Advertising 2017: Five Factors that Could Rein in Future Growth - eMarketer
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eMarketer Report

Facebook Advertising 2017: Five Factors that Could Rein in Future Growth

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Executive Summary

Since 2012, News Feed ads have been the center of Facebook’s business. But the number of ads the company can show there is approaching its upper limit. As Facebook looks to new formats such as mid-roll video ads and messaging ads, concerns remain over video ad engagement, measurement and more. This report, based on extensive interviews with marketers and ad agency executives, digs into five factors that could impact future growth—and what marketers need to know about them.

  • As the second largest digital publisher in the world, Facebook is expected to bring in $36.29 billion in worldwide ad revenues this year, up 35.0% from 2016. Within the digital display category, Facebook is No. 1 by a wide margin.
  • Facebook ad spending is still rising at a fast clip, but the pace of growth will be markedly lower by 2018 than it was in 2016. eMarketer forecasts 26.5% growth in 2018—less than half the pace of the 57.4% increase seen in 2016.
  • Factor No. 1: The News Feed—Facebook’s bedrock—is showing its age, and ad load in the feed will reach its upper limit this year. As the company approaches this turning point, there is increased pressure to launch successful next-generation ad formats.
  • Factor No. 2: There are questions about users’ engagement and mood when using the main Facebook platform (partially due to the rise of fake news)—even though total user counts and time spent on Facebook continue to rise.
  • Factor No. 3: Facebook’s video ad strategy hasn’t completely jelled, and some advertisers have been underwhelmed with their results.
  • Factor No. 4: Measurement glitches and a walled garden approach to sharing data are making advertisers more uncertain about whether their ads are performing as well as Facebook says they are.
  • Factor No. 5: Recent brand safety concerns centering on Google and YouTube could extend to Facebook, with video advertising and the Facebook Audience Network most vulnerable.

"Ads in the News Feed have helped Facebook achieve enormous success in digital display advertising, with revenues far ahead of other publishers."

After Five Years of Rapid Growth, a Slowdown Ahead

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The Aging News Feed and Ad Load Concerns

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User Fatigue and Changing Mood in an Era of Fake News

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Video Advertising Formats Haven’t Jelled

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Glitches in the Walled Garden

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Brand Safety Worries

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16 charts are included in the full report:

Facebook Advertising 2017: Five Factors that Could Rein in Future Growth

Net US Digital Display Ad Revenues for Facebook, Google and Snapchat, 2017 (billions)

After Five Years of Rapid Growth, a Slowdown Ahead

Net Digital Ad Revenues Worldwide, by Company, 2016-2019 (billions)

Net Display Ad Revenues Worldwide, by Company, 2016-2019 (billions)

Net US Digital Display Ad Revenues, by Company, 2016-2019 (billions, % change and % of total)

Expected Change in Social Ad Spending According to Advertising Professionals Worldwide, by Platform, Dec 2016 (% of respondents)

Net Digital Ad Revenue Growth Worldwide, by Company, 2016-2019 (% change)

User Fatigue and Changing Mood in an Era of Fake News

Facebook Users Worldwide, 2015-2020 (billions and % change)

US Social Media Users Who Are Using Select Social Media Platforms More/Less than 6 Months Ago, April 2017 (% of respondents)

A Few Signs of Slippage

US Usage Metrics for Facebook vs. Instagram, July 2015-Jan 2017 (% of respondents)

US Facebook Users Who Use Facebook Less Often, by Age, 2006-2017 (% of respondents in each group)

Change/Expected Change in Time Spent Using Facebook over the Past Year vs. Next Year According to US Facebook Users, by Age, Nov 2016 (% of respondents in each group)

The Fake News Effect

Importance of Digital News/Current Event Sources According to US Internet Users, Dec 2016 (% of respondents)

Video Advertising Formats Haven’t Jelled

Digital Video Ad Spending Share According to US Senior Ad Buyers, by Platform, 2016-2018 (% of total)

Difference Between Facebook and YouTube Video Ad ROI According to US Ad/Marketing Professionals, Sep 2015-Feb 2017 (% of respondents)

Glitches in the Walled Garden

Reasons that US Agency/Marketing Professionals Are Secure in Their Facebook Ad Spending Despite Recent Audience Tracking Errors, Dec 2016 (% of respondents)

Brand Safety Worries

Concerns with Digital Advertising According to US Media Planners, Aug 2016 (% of respondents)

Interviews included in the full report:

For Heineken, With Ads of 6 Seconds, Facebook Is a Mobile ‘Billboard’

Interview conducted on March 27, 2017

Why This Beauty Brand Doesn’t Care if Facebook Copies Snapchat

Interview conducted on March 24, 2017

Facebook’s Ad Load Ceiling an Issue for Chef’d and Other Brands

Interview conducted on March 28, 2017

Absolut on Facebook’s Video Ad Strategy: ‘Time Will Tell’

Interview conducted on April 3, 2017

CMO One-to-One: Nestlé Waters Has Faith in Facebook Despite Fake News Troubles

Interview conducted on March 31, 2017

Interview conducted on March 29, 2017

Interview conducted on March 16, 2017

Interview conducted on April 17, 2017

Interview conducted on March 16, 2017

Interview conducted on March 14, 2017

Interview conducted on March 21, 2017

Interview conducted on March 28, 2017

Interview conducted on March 29, 2017

Interview conducted on March 15, 2017

Interview conducted on March 23, 2017

Interview conducted on March 29, 2017