Facebook is enjoying big profits this quarter, which is great news for the social media giant — but were there any lessons companies large and small could take away from the call?
Against a backdrop of a global pandemic hitting business hard across multiple sectors, Facebook made its Quarter 1 earnings call at the end of April, revealing in spite of everything, business is very good for the social media giant. For a company whose financial success is built on advertising — an area already impacted heavily by COVID-19 — Facebook has actually managed to double its profits from this time last year: That's first quarter earnings of $4.9 billion compared with $2.43 billion during the same period last year.
Overall, revenues grew by 18% to $17.74 billion versus last year's $15.08 billion. Yes, advertising revenues dropped steeply in March but during the first few weeks in April, the decline stabilized according to Facebook's founder and CEO, Mark Zuckerberg.
Social channel growth rates have exploded
Critically, the social media giant's channels have seen a massive uptake since the beginning of the pandemic. While hardly surprising under the circumstances, the growth figures are still eye-opening:
• There are over three billion people now actively using Facebook, Instagram, WhatsApp, or Messenger each month.
• That's 2.6 billion people using Facebook alone, and over 2.3 billion people using at least one of Facebook's services every day.
• Messaging volumes have increased more than 50% in places that have been hit hardest by the virus; in Italy, for example, up to 70% more time was spent across Facebook's apps.
• Voice and video calling has more than doubled across WhatsApp and Messenger with group video calling increasing by more than a 1,000% over March.
How Facebook is maintaining its business services
For companies reliant on services such as WhatsApp Business for communicating with customers as they shelter at home, Zuckerberg offered reassurance that Facebook's systems are robust enough to manage the huge increase in traffic.
"We're monitoring usage closely and adding capacity in our data centers where we can," he stated. "The investments we've made in shared infrastructure that cover all of our different services over the years has helped us manage through this."
During the call, Zuckerberg also made it clear that Facebook and its many platforms depend on the success of small business to continue growing, stating that "this is a moment where we feel that we're well positioned to be champions for small businesses interests."
How Facebook aims to aid business during unprecedented times
To underline this commitment to businesses during and after the pandemic, Zuckerberg highlighted several important enterprise features available through Facebook's WhatsApp and Messenger services. These include:
By far the most used video chat platforms, WhatsApp and Messenger have seen more than 700 million daily actives participating in calls across the two channels. To support this uptake on WhatsApp in particular, Facebook has doubled the size of WhatsApp video calls from four to eight people as "WhatsApp is the most popular end-to-end encrypted calling service."
Over 800 million daily actives are engaging with live streams on Facebook Live or Instagram. These cover a whole gamut of activities, including business-related events from get-fit workout classes to live concerts. To support businesses leverage this potential revenue stream further, Facebook says its events teams are helping companies create online events where people can be charged to join, and is working especially close with businesses that previously relied on in-person services only.
With so many businesses forced to close their physical storefronts, more are looking to build or consolidate their digital presences. To support them, Facebook is working on a number of ways to enhance customer experience, such as helping people buy items and services directly in-app. While WhatsApp Business already offers this critical functionality, Zuckerberg says that he is "going to have a lot more to share" about new features soon.
The ongoing fallout of the pandemic is having a crippling effect on small local businesses in particular. Exacerbating the issue is how some are struggling to let customers know they are open and, say, able to deliver goods. To help these firms survive, efforts are being made by local communities to put together lists of local companies that haven't shut up shop to help align local supply with local demand.
What businesses can take away from Facebook's earnings call
While no one is clear when this pandemic will be over and what the specific long term effects will be on commerce, Facebook was prepared to offer its own advice on what businesses can do now to build resilience, and manage disruption in the future:
Change targeting priorities
While the current success of certain sectors such as gaming demonstrate customers are still out there, they are no longer on the physical high street. Instead, they're at home on Facebook, WhatsApp, Instagram, and more. And that's where the smart customer engagement bucks should now be focused in the short term — and perhaps long into the future too — as the fallout from the pandemic sees consumers move away from physical stores and buying online instead.
Stop waiting to transform
Bearing this in mind, Facebook's message to business is simple: Get online because e-commerce is now part of every company's future. Whether it's a small indie retailer reaching out to its local community or a large company that has previously resisted fully committing to digital transformation, the time for procrastination is over.
"With so many businesses forced to close their physical storefronts," explained Zuckerberg, "more are looking to build their digital presences and those which already invested in their digital presences are increasingly viewing them as the primary storefronts."
Underlining this significant transition, Facebook's COO & Director Sheryl Sandberg explained more consumers are looking for businesses via the social giant's channels during this crisis, meaning "our free products are particularly important to the many brick-and-mortar businesses pivoting quickly online ... many are finding creative ways to engage their customers using our free products. From gyms offering workouts on Facebook Live to stores and restaurants using WhatsApp and Messenger to reach customers with delivery options."
Measure ad success forensically
Businesses must also examine their success rates more closely than ever. Facing the challenges of business uncertainties, it is critical to calculate accurate returns on investment. By harnessing these insights, Facebook believes marketers working with reduced budgets can make their spend go further.
SMBs: Why it's important to seize opportunities now
Facebook's earnings call demonstrated the company isn't simply sitting back and resting on it laurels (or money). Instead, it is making a concerted effort to help businesses face down the existential threat represented by the pandemic.
By leveraging modern platforms and tools such as social media, businesses can now explore their potential so, as the world slowly comes out of this crisis, more businesses will emerge from its shadow, down but by no means out.