Facebook claims ‘healthy growth’ in video ads during Q2

Facebook COO Sheryl Sandberg said Facebook is seeing the trend toward video across all of its apps. (Facebook)

Facebook’s stock is taking a beating after revenue misses and weak guidance scared off investors to the tune of almost $100 billion in market cap. But video could be a small bright spot.

During Wednesday’s earnings call, Facebook COO Sheryl Sandberg said video advertising is becoming a bigger contributor for the company.

“Marketers are making more video of their own. We're seeing healthy growth in video ads among all advertiser segments,” Sandberg said. She pointed toward an M&M's campaign in the UK that used mobile-optimized five-second video ads on Facebook and Instagram and subsequently saw sales increase by more than 10%.

While it’s unclear how big of a contributor video ads were toward Facebook’s overall revenues, the company did report a 42% increase in advertising revenues, which rose above $13 billion for the quarter. But CFO David Wehner warned that Facebook’s investments in its video content and platforms may not be chipping in much just yet.

“We're also investing in things like video, Watch and the like, which have the potential to contribute on the revenue side, but still relatively small in perspective of the overall business,” Wehner said according to a Seeking Alpha transcript.

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Sandberg said Facebook is seeing the trend toward video across all of its apps including users sharing more video on Facebook, watching more video from creators on Instagram and having more video calls on WhatsApp and Messenger.

To that end, she highlighted Facebook’s efforts to make it easier for creators and publishers to build ads into video content. Last quarter, Facebook released Ads Animator to allow users to video ads using photos and other content that's already on a company's Facebook page. The company also launched Video Creation Kit, which supplies video templates for different marketing objectives.

Facebook said it’s also working to make ads easier to run on Instagram and in Stories. In particular, the company wanted to make it easier for advertisers to adopt the Stories format by allowing uploaded video in a square or horizontal format for the feed to be automatically converted to the full-screen vertical format of Stories.