Facebook’s Q3 2016 earnings call: ad load issues, ad-blocker blocking, a video-only feed

There are a lot of things that can be learned from Facebook’s third-quarter earnings call on Wednesday. For starters, word choice matters.

In July 2016, during the company’s Q2 2016 earnings call, Facebook CFO David Wehner said that the number of ads Facebook can stuff in each user’s face — or, Facebook’s “ad load” — would top out around mid-2017. That’s important because increases in ad load have helped to increase Facebook’s ad revenue. As a result of the ad load deceleration, Wehner said Facebook’s ad revenue growth would be impacted.

Today, during Facebook’s Q3 2016 earnings call, Wehner said roughly the same thing — except for one word. Three months ago, he said ad revenue growth would be impacted “accordingly.” Three months later, he said it would be impacted “meaningfully.”

Apparently that change in adverbs freaked out Wall Street investors. Roughly an hour after Wehner made those comments on Wednesday, Facebook’s stock price had dropped by 8% in after-hours trading.

Wehner didn’t offer any new explanations for Facebook’s ad load issue or its potential impact on revenue growth. And he didn’t explain his new choice of words. So there doesn’t seem to be much new to say about why ad load has become an important issue for Facebook.

Besides there are other things worth mentioning from Facebook’s Q3 2016 earnings call.

Blocking ad blockers works — at least if you’re Facebook
For the first time in two years, Facebook’s Q3 desktop ad revenue exceeded $1 billion. Not only that, but Facebook’s Q3 desktop ad revenue grew by 18% year-over-year, which is stunning for a few reasons. 1) Until Q3 2016, the most that Facebook’s desktop ad revenue had grown in a quarter since Q4 2013 was 10%. 2) Facebook’s desktop ad revenue had actually shrunk year-over-year for three straight quarters in 2015, including Q3 2015. 3) Not only did Q3 2016 desktop ad revenue top the diminished Q3 2015 mark, but it also topped the still-strong Q3 2014 mark.

Facebook’s suddenly reinvigorated desktop ad revenue business might seem as odd as an aging baseball player turning in one of his best seasons ever in his final season. So what gives? Ad blocking, apparently.

In August Facebook decided to fight back against ad blockers by knee-capping their ability to block the ads on Facebook’s desktop site. The strategy seems to be working. Wehner attributed the uptick in desktop ad revenue growth as “largely due to our efforts on reducing the impact of ad blocking. That’s what led to the acceleration of desktop revenue.”

Facebook’s getting closer to fully rolling out its video-only news feed
A year ago Facebook started testing a video-only version of its news feed. If you’ve never come across this video feed, you’re not alone. It’s only been available in “a few markets,” said Facebook CEO Mark Zuckerberg during Wednesday’s earnings call. But you might see it soon. Pretty soon.

“We’re also hoping to roll that out pretty soon widely,” Zuckerberg said, before describing the feature.

“That’s the new experience, which if you come to Facebook and you specifically want to watch some different kinds of videos or you want to see what videos a recent Page that you follow has posted or the presidential debate is on and you want to find a good place to go online to get that, you can go to Video Home and see that,” said Zuckerberg, who added that Facebook is also considering splitting the video-only feed off into its own app a la Facebook Messenger.

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