WEBVTT - Bloomberg's Waral on Facebook: Ad Metrics Tough to Beat (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business flag from Bloomberg World Handquarters,

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<v Speaker 1>Signed Charlie Pellett. Facebook reporting second quarter revenue that beat

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<v Speaker 1>handless projections, lifted by sales of video and Instagram ads.

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<v Speaker 1>We did see shares of Facebook up by seven percent.

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<v Speaker 1>Google reports earnings tomorrow. After the bell. Moments ago, we

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<v Speaker 1>heard from amngine its second quarter profit beat analysts estimates,

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<v Speaker 1>driven by higher than expected drug sales. The company also

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<v Speaker 1>raised its guidance for the year. Most stocks fell earnings

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<v Speaker 1>on the price of crude, largely setting the tone for

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<v Speaker 1>individual shares. As investors assess the Federal Reserve's latest policy

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<v Speaker 1>decision ten year up fifteen thirty seconds, yield there one

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<v Speaker 1>point five percent. Group on shares moving higher now by

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<v Speaker 1>eighteen percent after boosting its year view. Right now we

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<v Speaker 1>have got its yearly reven new view. I should say

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<v Speaker 1>SMP down two points to sixty six and drop there

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<v Speaker 1>of point one percent down, Industrials down a point little change,

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<v Speaker 1>as stack up twenty nine a gain of six tenths

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<v Speaker 1>of one percent, and gold up again. There of one

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<v Speaker 1>and a half percent. I'm Charlie Pellock. That's a Bloomberg

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<v Speaker 1>business flash. This is taking stock with Gableen Hays and

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<v Speaker 1>pim Box on Bloomberg Radio. Shares of Facebook are moving

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<v Speaker 1>higher by more than seven and a half percent and

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<v Speaker 1>after hours trading. As a result of their second quarter

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<v Speaker 1>earnings release, the company reported that second quarter sales climbed

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<v Speaker 1>fifty nine percent to six point four billion dollars. That

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<v Speaker 1>beat analysts projections. Also, to take a look at how

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<v Speaker 1>many monthly average users they added last quarter, sixty million

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<v Speaker 1>monthly average users were added. That's twenty times what Twitter added.

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<v Speaker 1>Here to tell us more about Facebook is to Tendra Warrel,

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<v Speaker 1>global Internet and consumer Electronics analysts for Bloomberg Intelligence, providing

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<v Speaker 1>unique and real time research in a variety of industries, markets,

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<v Speaker 1>and all the government factors that affect businesses. Our terminal

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<v Speaker 1>customers can access this function at b I Go and

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<v Speaker 1>there Tender joins us from our Bloomberg nine six studio

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<v Speaker 1>in San Francisco. Jotendra tell us about Facebook and the

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<v Speaker 1>results today a PM so an absolute blowout quota. The

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<v Speaker 1>street was expecting forty nine percent growth and revenues. You know,

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<v Speaker 1>they ended up coming at fift Mobile is basically behind,

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<v Speaker 1>uh the entire growth story here, and obviously video acceloration

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<v Speaker 1>continues and a new revenue stream. Instagram is probably adding

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<v Speaker 1>more than what what we thought it did. So all

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<v Speaker 1>in all, great quota. And most importantly, if you look

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<v Speaker 1>at the engagement numbers, they are accelerating, so people are

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<v Speaker 1>more engaged on Facebook or any competition fears that people

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<v Speaker 1>had may alleviate, like likes of Snapchat cutting into Facebook's

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<v Speaker 1>time or people getting bored of Facebook and all those things. Uh,

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<v Speaker 1>these numbers are not showing any of that fatigues. So

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<v Speaker 1>all in all pointing to continued growth and market share

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<v Speaker 1>um in in mobile advertising. So tender to we do

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<v Speaker 1>we get any breakdown geographically US versus Overseas, etcetera. Yeah,

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<v Speaker 1>we do. And the interesting thing is, like US growth

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<v Speaker 1>was very strong about six y o y over here

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<v Speaker 1>and and really it's a broad based sort of growth

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<v Speaker 1>that we're seeing across you know, different regions that Facebook

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<v Speaker 1>operates in. But most importantly, like you see an acceleration

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<v Speaker 1>in our pool, like the average revenue they are making

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<v Speaker 1>poor user that's going up. Probably they are up selling

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<v Speaker 1>more services more targeted as to the same users loosing

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<v Speaker 1>more dollars out of it. Uh. So you see US

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<v Speaker 1>obviously leads over there with the r pool numbers, but

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<v Speaker 1>the US growth I think it's really broad based at

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<v Speaker 1>this point. I wonder if you could comment on the

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<v Speaker 1>goodwill that's such a blowout Quarter creates for Facebook to

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<v Speaker 1>allow them to invest in things such as Internet, drones

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<v Speaker 1>and virtual reality. Reported from our Sarah Fryer at Bloomberg. Yeah,

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<v Speaker 1>it continues to build that good will. Actually, so Facebook

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<v Speaker 1>has been up pulling this balancing act beautifully in terms

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<v Speaker 1>of like supporting these heavy growth expectations with their core

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<v Speaker 1>business Instagram and video while building new revenue streams like

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<v Speaker 1>rtual reality and let's not forget messaging. You know their

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<v Speaker 1>messaging services. What's happened Messenger have more than two billion

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<v Speaker 1>people on on that service and they don't make money

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<v Speaker 1>out of it yet. So the idea here is, let

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<v Speaker 1>the core uh support of growth that Wall Street expects

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<v Speaker 1>until the new revenue streams come to write it further, So,

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<v Speaker 1>can anybody's Facebook now, just in a world a universe

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<v Speaker 1>of its own, can anybody quote unquote compete with Facebook? Well,

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<v Speaker 1>there's Google on the other end of the equation, but

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<v Speaker 1>the Google and Facebook basically account for fifty of mobile

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<v Speaker 1>advertising UM industry revenues. And really the strength that Facebook

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<v Speaker 1>has that nobody can really compete with them is targeting.

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<v Speaker 1>You know, they can target not just like what interest

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<v Speaker 1>do you have, but contextually when you are more likely

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<v Speaker 1>to do it better than most other incumbents. So that

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<v Speaker 1>translates to better r o I for advertisers, and you know,

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<v Speaker 1>once they see better r o I, they come back

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<v Speaker 1>with more to sender. What does this tell us about

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<v Speaker 1>not only the performance of Facebook, but comparison with Twitter

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<v Speaker 1>basically tells us that Twitter has a company specific issue

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<v Speaker 1>and brands are less likely to sort of like spick

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<v Speaker 1>with them. I mean, they're seeing brand weakness over there. Uh,

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<v Speaker 1>They're they're in. They're basically they're seeing brand weakness in

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<v Speaker 1>like advertising revenues that they're seeing and the growth rate

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<v Speaker 1>expectation for three Q is like five. I mean that's

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<v Speaker 1>Yeahhoo's mobile growth rate was a three last quarter. So

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<v Speaker 1>obviously the company's specific issue and there's no clear signal

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<v Speaker 1>yet that the new Life strategy can turn around this trend.

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<v Speaker 1>But the tender seems to me too. These are different

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<v Speaker 1>business models. They sell people different things, right, comparing Google's

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<v Speaker 1>mobile to facebooks mobiles mobile. Because Facebook, there's only one

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<v Speaker 1>site that does this for you, connect to you with

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<v Speaker 1>friends and business and everybody else. Twitter's all about Twitter

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<v Speaker 1>character messages out. Uh. That's why I ask cannybody compete

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<v Speaker 1>with them because they may have equal mobile ads with Google.

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<v Speaker 1>Google may may meet them there, but in terms of

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<v Speaker 1>what they do, who else does this to this extent? Right?

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<v Speaker 1>So what advotisers only care about what is the cost

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<v Speaker 1>of acquiring a user and what is the return or

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<v Speaker 1>investment I get for paying that cost, and whoever shows

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<v Speaker 1>better on those metrics, they go with them. Right. So

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<v Speaker 1>if you look at Twitter's market share, it's like loose

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<v Speaker 1>single digits verresus. We talked about Google and Facebook taking

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<v Speaker 1>like of the market so they have the volume, they

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<v Speaker 1>have the targeting. But you're right about like, Um, you

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<v Speaker 1>know these guys serving sort of different uh forms of advertising,

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<v Speaker 1>especially Google and Facebook because you know, search is equally important.

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<v Speaker 1>So Google and Facebook have pretty much become the staple

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<v Speaker 1>of digital advertising for marketeers. Septender Roll, thank you so

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<v Speaker 1>very much for joining us from Bloomberg Intelligence, where his

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<v Speaker 1>global Internet and consumer Electronics analysts, doing a terrific job

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<v Speaker 1>today of just laying out these amazing Facebook numbers. I

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<v Speaker 1>want to think Marx Kosti, who's our technical director today,

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<v Speaker 1>and of course Sam laying U putting together to a

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<v Speaker 1>terrific show today. As our producer, I'm Kathleen Hayes along

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<v Speaker 1>with Pim Fox. This is Bloomberg. Yeah, coming up Bloomberg Laws.

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