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Facebook and Google’s Q2 Earnings: Three Takeaways for Advertisers

Last month, Facebook and Alphabet (Google’s parent) both announced impressive earnings for Q2 2016, with Facebook raking in more than $6.2 billion for the quarter and Alphabet announcing revenue of $21.5 billion. Facebook smashed through previous records for its mobile advertising unit, with mobile making up more than 80% of Facebook’s revenue for the quarter and representing an 81% increase over Q2 2015. While these results are certainly impressive, they also provide a number of interesting clues about where these advertising platforms may head in the future. What can advertisers learn about their own video advertising strategies from these two companies’ results? Here are three key takeaways:

1. Mobile Advertising is Critical
The fact that both Facebook’s and Alphabet’s record earnings were driven by mobile ads is no surprise. Consumers are spending more time than ever on mobile devices, and the ad dollars are following as well. For advertisers, this means more opportunity to integrate mobile into existing TV and video campaigns and more opportunities to test mobile-only video campaigns. “Video is the killer format on mobile,” said Google CEO Sundar Pichai.

2. Video Advertising is the Future
One of the more interesting comments from Facebook’s presentation was that the company’s executives are trying to find the right balance between showing ads and organic posts. “We want to be thoughtful about making sure each person’s overall feed experience has the right balance of organic and ad content,” said Facebook CFO Dave Wehner. This means Facebook is hitting a saturation point with ads in users’ newsfeeds, meaning they’ll need to keep inventing new ad formats to keep growing and keep advertisers interested. Expect to see more attempts by Facebook to try and design video ad products to entice ad dollars away from other ad formats like TV in the future. 

3. More Effective and Relevant Ads Matter
Much of the success seen by Google and Facebook in the past quarter is a direct result of their ads’ performance for advertisers. In order for buyers to continue investing in these two platforms, they’re going to need to see impressive results in terms of views and clicks. That means both advertisers and these platforms need to continue their “education process” as they try and figure out what types of ads and messages work best with consumers. Just because something is working now is no guarantee it will perform as well in the future.

This quarter’s strong performance by Facebook and Google is a great reminder of not only the continued strength of the online advertising marketplace, but also of the campaign strategies and ad formats advertisers will need to keep in mind in the months and years to come.