Home Platforms Facebook’s ARPU Tops $41 In North America, But Ad Targeting ‘Headwinds’ Haven’t Dissipated

Facebook’s ARPU Tops $41 In North America, But Ad Targeting ‘Headwinds’ Haven’t Dissipated


Remember those “ad targeting-related headwinds” Facebook keeps talking about every quarter? They’re finally going to hit this year.

Facebook experienced some effects in 2019 from global privacy regulations, privacy-focused changes made by mobile operating systems and browsers (Google did a thing) and its own privacy product rollouts.

However, “the majority of the impact lies in front of us,” Facebook CFO Dave Wehner told investors Wednesday on the company’s 2019 earnings call.

But that’s not why Facebook’s stock tumbled more than 7% in after-hours trading.

Although Facebook handily beat Wall Street’s revenue estimates, with $20.7 billion in ad revenue for the quarter and nearly $70 billion in ad revenue for the year, its expenses are through the roof.

Facebook spending rose 51% last year to $46.71 billion, and it predicts 2020 total expenses of $54 billion to $59 billion. That estimate is unchanged from its prior outlook.

The company is spending more across the board on everything from sales and marketing to R&D and infrastructure.

Its US growth rate in Q4 was also the slowest it’s been in a while. Wehner warned Facebook’s Q1 revenue growth rate will decelerate by low- to mid-single digit percentage points compared to Q4.

Factors driving the deceleration include the maturity of Facebook’s business, privacy regs coming into effect around the world and those ad targeting-related headwinds, he said.

Because Facebook isn’t immune to browser changes. Although Facebook is cited as a likely beneficiary of Google’s plan to deprecate third-party cookies in Chrome – walled gardens win in a post-cookie landscape – Facebook uses signals from third-party sites and services to deliver ads. Cutting off access to third-party cookies will limit Facebook’s ad targeting and measurement abilities.

Despite the deceleration, average revenue per user keeps growing, albeit at a much faster rate in North America than anywhere else in the world.


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ARPU in the United States and Canada was $41.41 in Q4, up from $34.86 in Q4 2018. Compare that with Europe, where ARPU was $13.21 in the fourth quarter, up from $10.98 the year before.

The reason for the wide gap: “You just get different dynamics based on the characteristics of those countries,” Wehner said.

The United States and Canada are mature markets and the only two countries in their ARPU segment. But the Europe segment is a broader mix of countries, including Turkey and those in Eastern Europe, which, Wehner said, tend to be lower advertising markets per capita than other countries included in the segment, such as France and Germany.

In other news, Facebook acknowledged on the call that it reached a $550 million settlement in the facial recognition class-action lawsuit it faced in Illinois. And Facebook still hasn’t paid the $5 billion fine levied by the Federal Trade Commission last year for privacy violations; the agreement is still pending court approval.

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