Facebook’s problems are mounting. Although ad revenues for the mammoth social network are still rising, advertisers are getting restless, and users are, too.
How much will Facebook’s ad revenues change?
Worldwide ad spending on Facebook and Instagram combined will rise 22.5% this year and reach nearly $95 billion in 2021. The youthful Instagram has more momentum—its ad revenues will nearly double by 2021. But core Facebook will still account for 71.5% of total ad revenues for the company in 2021.
Will advertisers stick with Facebook despite its many problems?
Precise targeting, abundant reach—and a heavy amount of inertia—will keep advertisers locked in for the next couple of years. However, they are paying more attention than ever to how the company is navigating its challenges, and their concerns are growing.
Are any consumer engagement red flags starting to surface?
Yes. There will be continued declines in the number of younger users of Facebook in developed markets. And privacy concerns and intense media scrutiny are damaging Facebook’s reputation with consumers.
What will happen to ad targeting?
More ad targeting options will go away. Regulatory action, such as the $5 billion fine approved by the Federal Trade Commission this month, may play a role. But Facebook will continue to make its own changes in an attempt to stay one step ahead of regulators.
How will messaging and commerce evolve?
The company will have difficulty fulfilling its WeChat-like ambitions, at least in the US, and we believe messaging advertising will remain at a slow burn. But we do expect momentum in social commerce and commerce-related advertising.
What about Stories, Groups and videos?
The company will double down on Story advertising as this popular feature gains even more traction. Facebook will remain a leading player in video advertising, but the future of Facebook Watch is still murky. Finally, advertising will come to Facebook Groups, likely with new ad formats.
WHAT’S IN THIS REPORT? This report details how marketers and consumers feel about Facebook now and predicts what will and won’t change about its ad business in the next two years.
KEY STAT: Ad revenues for Facebook and Instagram combined will reach nearly $95 billion in 2021.