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  • Is Facebook Secretly Listening to You to Target Ads?

    Is Facebook Secretly Listening to You to Target Ads?

    Facebook knows you pretty well. In fact, I’d be willing to bet that Facebook knows more about what you like and how much you like it than many of your friends. Think about it. You’ve been dropping Facebook subtle and not-so-subtle hints for years. You casually “like” Netflix, The Big Lebowski, and AMC Theaters over the years? Facebook knows you like movies. You post every day about diapers, bottles, and naps? Facebook probably knows you have a baby.

    At this point, Facebook is really good at serving you ads based on pages you like, statuses you post, and even outside websites you visit. Scary good. If you’re unsure about this, then head on over to Amazon. Search for something you want. Check out the product page. Maybe even add it to your cart – but don’t buy it. Now, head back to Facebook. You see the ad, right?

    Facebook is a company that lives and dies by how much confidence it can instill in the minds of advertisers – confidence that their ads are being targeted to the right people at the right time. Because of this, Facebook is always looking for a better way to serve you ads. When Facebook sees that you just liked Outback Steakhouse, that’s a signal equivalent to you saying “I want to eat Outback Steakhouse.” When you like Groupon on Facebook, it’s your way of telling Facebook “I like hearing about daily deals.”

    Do you think it’s possible that Facebook could be listening to your conversations to target ads? Let us know in the comments.

    It’s a powerful marketing tool, for sure. Through a series of clicks, Facebook can take a guess at what you like, want, and need. It’s likely pretty accurate, for the most part.

    What’s more accurate, however, is literally hearing someone say it.

    – – – – – – – – – –

    Here’s an interesting theory, posed by a redditor:

    “I have a crazy conspiracy theory and I’m pretty sure I proved myself correct … while you’re scrolling through photos, Instagram listens in to what you say through your iPhone’s microphone to drive targeted advertising through Facebook,” says user popular_rhino in a discussion post on reddit’s r/technology subreddit.

    Here’s their story:

    I found this out after I saw an ad on Facebook for a club that I had been talking about two hours prior, out loud, to friends in my living room. I thought “well that’s a coincidence, what if my phone is listening to me speak.” I then remembered that less than 24 hours prior, I had granted Instagram access to my microphone, something I usually have disabled through privacy settings.

    I also remembered that I was using Instagram when I had mentioned the club. I went back into my phones privacy settings and immediately disabled Instagram’s access to the mic.

    So I drew up a test to test my theory- Does Instagram actually listen to my conversation just while scrolling through photos?

    I would turn on the mic, mentioning a list of random words that I had wrote down…. Bulldozer, cucumbers, the louvre, Maserati, hiking in the Yukon, African Safari vacation, and a few other random words/terms that had nothing to do with my Facebook interests.

    Sure enough, two hours later I was getting ads for Gold Coast Maserati, and African Vacations, also ads for art museums, and climbing.

    I did a quick search on Google and reddit to see if anyone else had come to the same conclusion but was unable to come up with anything. Has anyone else experienced this? is it widely known? Do you think I’m nuts?

    Nuts? Hardly. Other users quickly chimed in with their own, similar experiences.

    From u/SweetPrism:

    I’m almost positive this is true. I saw an ad on facebook for Victorian corsets. I mentioned in passing to my friend that I’d like a corset, but not a black and red Hot Topic one, a straight-up old school one. I wasn’t on Instagram, I have not done ANY searching online for them, and there are NONE pinned on my Pinterest, even. And I didn’t even turn on the mic on my phone. There was no other explanation than the fact that they have the ability to turn the mic on for you. This scares the ever-loving shit out of me, and it wasn’t the first time it’d happened, either. It was just one of the examples that stuck in my mind because there was literally no record of me expressing an interest in that item except verbally speaking to a friend

    From u/INVALID_STRING_NAME:

    So I have been testing this throughout the day using three different phones. I have concluded that Facebook and Instagram are utilizing location tracking and microphone access to provide targeted ads. Each phone I spoke about different things in different rooms, with and without the settings enabled.

    Each phone I scrolled through 10 pages. I ensured no background noise interfered and my wife made sure she didn’t talk about anything when the settings were enabled.

    Phone 1 – I spoke about House of Cards, Australia, Outback Steakhouse and baby toys.

    Phone 2 – I spoke about Biking, Hunting, Laptops and video games.

    Phone 3 – I spoke about printers, CCNA tests, Harry potter and getting a new bed.

    Sure enough a few hours later I would see ads relating to all of these things. We saw an increase in ads relating to Netflix, Cisco routers… Everything. My wife, my brother and I all removed the applications from our phones permanently. This is the scariest thing ever. This can’t legal. When we gave these apps access to those things I was under the impression it was being used for videos we’d record and post to Facebook and to Instagram.. Not to target ads to us.

    We have been doing our taxes and we spoke about social security numbers and all that stuff. Who knows what the person listening on the other side if there are any is doing with that information.

    From u/hummusdingus:

    It’s not (just) Instagram, it’s the Facebook app itself. The Twitter app has started too. I noticed this weird phenomenon about 2 years ago. I thought at first that since Facebook’s business model is to be the best-tailored ad machine to you, that it was working as expected, and that it was mere coincidence. But then the coincidences kept happening. The coincidences kept happening after verbal conversations too.

    I was talking with a friend about basketball, and then I started getting ads about the NCAA tournament.

    I talked to another friend about whether I could ever afford to buy a house, and then 30 minutes later, I started to get ads about home mortgages.

    My girlfriend and I were talking about engagement, and then we BOTH started to get ads about engagement rings.

    My girlfriend was talking to me about candy. Then we BOTH got the same Twitter sponsored post for Skittles.

    I was watching a financial documentary, and then got ads on the Twitter app about financial services. This one was particularly interesting – it’s normal to get widespread sponsored posts that have tens of thousands of retweets and favorites. This sponsored ad was from an unheard-of financial services company, that had 10 followers, and the post had 1 favorite.

    Again, it really could only have gotten these ad hints from audible conversation, not from the content of my posts or chats. It was very very interesting to me. I’ve deleted both the Facebook and Twitter apps (as well as my Facebook account) and it hasn’t happened again.

    Long story short, these people are claiming that Instagram, a Facebook-owned company, and likely Facebook itself, are listening in on their conversations and serving them real-time ads based on said conversations.

    – – – – – – – – – –

    Bottom line: Is this possible?

    Well, Facebook and/or Instagram would have to have access to your microphone. Both do, of course, if you’ve given them permission.

    Instagram has been asking users for microphone access for a little under a year – right around the time the company unveiled Instagram video. “Why is Instagram asking for permission to use my phone’s microphone?” asks a question on Instagram’s help page. Answer: “This permission allows Instagram to use your phone’s microphone to capture sound when recording a video.”

    Facebook – as well as Facebook Messenger – can also request access to your phone or tablet’s microphone. You may recall that Facebook found itself in a bit of hot water last summer over a new feature dubbed passive listening. In May of 2014, Facebook announced a new opt-in feature that allows the social network to listen to a user’s activity and use what it hears to help identify songs, TV shows, and movies for the purpose of crafting status updates. Basically, you give Facebook access to your microphone, it hears you watching Inglorious Basterds in the background, and automatically crafts a I’m watching Inglorious Basterds status update for you.

    This didn’t go over very well.

    Within hours, a petition demanding Facebook abandon plans for this new feature emerged. It quickly amassed hundreds of thousands of signatures.

    “Facebook says the feature will be used for harmless things, like identifying the song or TV show playing in the background, but it actually has the ability to listen to everything — including your private conservations — and store it indefinitely,” read the petition. “Not only is this move just downright creepy, it’s also a massive threat to our privacy. This isn’t the first time Facebook has been criticized for breaching our right to privacy, and it’s hoping this feature will fly under the radar.”

    Facebook responded, saying it was not always listening.

    “The microphone doesn’t turn itself on, it will ask for permission. It’s not always listening…so it’s very limited in what it is sampling,” Facebook Security Infrastructure head Gregg Stefancik said. “I wouldn’t want this in my pocket either if it was recording everything going on around me.”

    Facebook elaborated in a “debunking myths” post:

    Myth: The feature listens to and stores your conversations.

    Fact: Nope, no matter how interesting your conversation, this feature does not store sound or recordings. Facebook isn’t listening to or storing your conversations.

    Here’s how it works: if you choose to turn the feature on, when you write a status update, the app converts any sound into an audio fingerprint on your phone. This fingerprint is sent to our servers to try and match it against our database of audio and TV fingerprints. By design, we do not store fingerprints from your device for any amount of time. And in any event, the fingerprints can’t be reversed into the original audio because they don’t contain enough information.

    Myth: Facebook is always listening using your microphone.

    Fact: Nope, if you choose to turn this feature on, it will only use your microphone (for 15 seconds) when you’re actually writing a status update to try and match music and TV.

    Facebook clearly has the ability to listen via its own flagship and auxiliary apps, as well as through Instagram – but does it? And if it does, what’s it doing with all that data?

    – – – – – – – – – –

    After coming across the aforementioned reddit thread, I became curious. Not that it was a shock to me that Facebook could possibly do something like this – the “listening to your conversations” accusation has been thrown around for quite some time. But the specificity of which these Facebook users described their tests of concept, well, it intrigued me.

    So I opened up Facebook on my desktop. I had one sidebar ad – for Blue Apron, a meal delivery service. I don’t like Blue Apron on Facebook, and I don’t follow them on Instagram. I’ve never searched for Blue Apron and I most certainly have never visited the company’s website. I do post a lot of food photos, however.

    Then I remembered something – a brief conversation a friend and I had had on Sunday night about Blue Apron. She’d let me try a chicken pot pie that she’d cooked based on a Blue Apron recipe. We both mentioned the name “Blue Apron” a couple of times, and went about our Oscars-watching.

    Now, I had a Facebook ad for it.

    Naturally, I told my friend and co-worker Chris Crum about this. We mentioned Blue Apron several times.

    Twenty minutes later, Chris had a Facebook ad for Blue Apron. Like me, Chris doesn’t like Blue Apron on Facebook, and he doesn’t follow them on Instagram. He’s never searched for Blue Apron and most certainly has never visited the company’s website. Unlike me, Chris rarely posts about food or cooking.

    Thinking this was creepy and hilarious, we began to pay closer attention to the ads Facebook was serving us.

    Soon, Chris saw a Sprint ad featuring AAA. According to him, he’d been discussing renewing his AAA membership that morning on the way to work.

    Then, Chris saw an ad for Cottonelle. Moments later, an ad for Huggies. Chris had explicitly discussed with his wife the need to pick up toilet paper and diapers during his morning commute. To be fair, Facebook probably knows that Chris has a baby at home.

    We noticed an ad for JINX.com, a clothing company. We remembered we’d recently discussed the new HBO series The Jinx: The Life and Deaths of Robert Durst.

    We noticed an ad for a game called Real Sniper about an hour after discussing the film American Sniper.

    In a weekend act of stupidity, I recently shattered my phone. All morning I’d been talking about needing a new phone. Soon we were both hit with multiple Sprint ads, as well as “special offers for AT&T”.

    At this point, we both decided to have some fun with this. We made sure that Instagram and Facebook were both running on our phones (in the background), and started talking (loudly) about things like travel, wanting to travel, art, art museums, our love of deals, daily deals, amazon, and the need for a new car.

    Within the next hour, we both saw multiple automobile ads (Lexus, Mini), as well as multiple travel-related ads (Viator, Norway cruises). Chris saw an ad for Lactaid that was framed in the most bizarre manner. The ad featured several mentions of “travel”, with the only logic behind it being that people who travel like to drink hot chocolate and when you drink hot chocolate you should put Lactaid in it.

    A half-hour after our loud conversation, I saw an ad for Art.com.

    For the next few hours, we both saw suggested posts for Amazon deals.

    – – – – – – – – – –

    So we slept on it. The Blue Apron thing, the AAA thing, and the toilet paper thing were weird, for sure – but many of those other ad subjects were rather generic. Cars, Amazon deal, vacations. These are the types of ads that many see, although they were timed rather perfectly with our conversations.

    But how often do 30-year-old men see ads for sanitary pads?

    About an hour after getting to the office, Chris saw an ad for overnight leakage protection pads – for children. He mentioned to me that he and his wife had been having a conversation about periods in the car that morning.

    Not quite perfect targeting, I said. But kind of close. We mentioned the term “pads” multiple times.

    Less than an hour later, Chris had an ad from Poise touting its leakage pads. The ad featured the hashtag #recycleyourperiodpad. Chris is a man. Facebook knows this, for sure. Yet he was now receiving ads for feminine hygiene products.

    – – – – – – – – – –

    Coincidence? Quite possibly. Frequency Illusion? Maybe. Everything here is purely anecdotal.

    But one’s an incident, two’s a coincidence, and three’s a pattern, right?

    This isn’t the first time people have noticed that Facebook has a weird ability to know exactly what you were just talking about. People were complaining about this over a year ago – in Facebook’s own community help center.

    Here’s a story from one user in response to the question “why does the mobile app need access to my microphone or camera w/o my consent?”

    “I found this page after I noticed a strange ‘suggested page’. It was for a douche bag that was on a TV show that was playing at a friend’s house last night. I’ve never given any indication that I would ever watch this show from any of my posts or other likes on Facebook. The only thing I could think of, was that Facebook picked up the audio from my phone. That’s what got me looking at the app’s permissions in the first place. While I know that Facebook is the customer here, and if you truly want to have privacy, you shouldn’t have a social account of any kind, I still feel violated by the idea that the Facebook app could be listening in.”

    “Something very similar happened to me today,” said another user. “I was talking about belgian waffles with my mother this morning and I know I had my phone next to me. Never googled it or typed it anywhere on my phone or laptop. But then a little while ago I noticed that there was a ‘suggested post’ about belgian waffles. REALLY creepy.”

    Facebook is a company that already targets ads, algorithmically, based on keywords. Facebook employs real-time ad targeting. Facebook has access to voice recognition software. We’re talking about a company with an entire business model devoted to pleasing advertisers through better targeting and better results. It’s constantly making improvements – tweaking its ad offerings to squeeze every little bit it can.

    And it just hit 2 million active advertisers.

    Once again, this is all anecdotal at this point and a reasonable person could explain it away as coincidence or some admittedly hilarious cognitive bias. But if Facebook were listening to your conversations, via Instagram or any of its other apps, would it really surprise you?

    “If someone describes an idea as a ‘crazy conspiracy theory,’ it probably is. This has no basis in fact,” a Facebook spokesperson told WebProNews.

    Have you experienced anything like this? Let us know in the comments.

  • Ad Viewability Contention Rages On

    Ad Viewability Contention Rages On

    If there’s one hot topic in online advertising in 2015, it’s viewability. It’s causing a lot of disagreements between advertisers and publishers, and it’s the subject of a great deal of confusion and chaos throughout the industry.

    What are your thoughts on the subject? What needs to be done? How do publishers need to adapt? Should advertisers be more patient? Discuss in the comments.

    Google and Facebook have both been talking about viewability efforts of late. Google recently rolled out viewability reporting across its ad platforms. Facebook talked last week about what viewed impressions mean for its own advertisers.

    The company says it measures ad impressions the moment the ad enters the screen, and if it doesn’t enter the screen, it doesn’t count it as an impression. Soon it will apply this to organic content from businesses as well. It also says it’s working with the Media Rating Council (MRC) and a consortium of advertisers and agencies to develop “more robust standards” for viewable impressions.

    “Our goal is to work with the MRC, our partners, and industry leaders around the world to help apply further standards for feed-based websites like Facebook, mobile media and new ad formats,” the Facebook for Business team said.

    “We’re working closely with Facebook and they’re doing compelling research around the viewable status and value of advertising of all types of impressions on their media, including those that quickly come in and out of view on a person’s screen. We will continue to collaborate and ensure that we consider the learning relevant to feed-based, mobile focused publishers in our viewable impression standard going forward,” said MRC CEO George Ivie.

    According to ClickZ, the MRC considers viewability to be specifically “50 percent of pixels of an ad unit remains viewable for a minimum of one second for display and 50 percent of pixels in view for a minimum of two seconds for video,” which many find much too low.

    Back in December, the Interactive Advertising Bureau (IAB) released its “State of Viewability Transaction 2015″ report aimed at offering guidance on how to manage the “shift of digital media’s ‘audience currency’ to 100 percent viewability.”

    It said 100% viewability measurement simply isn’t possible. Instead, it recommends 70% as the best threshold for buyers and sellers. 2015, it says, will be a “year of transition.”

    Since the IAB’s report, viewability has only become a more hotly debated topic. Advertisers are demanding more viewability while publishers struggle to deliver and maintain that advertisers are sometimes not seeing the big picture about the difficulty of meeting such demand, or in some cases even the validity of the data they’re seeing.

    Ad Age recently shared some demands by advertisers it had obtained from various publishers. Some demand 100% viewability. Others are more reasonable, but are still very firm in seeking “make-goods” for out of view impressions. Suffice it to say, this is being much more carefully looked at by all parties these days.

    Last month, Mike Shields at The Wall Street Journal wrote that “the push for web ad viewability [is] proving to be a nightmare for publishers early on.”

    “In the near term, the issue has caused contentious negotiations and rocked how many big publishers manage and forecast inventory for 2015, which in turn effects how they project revenue for the year, top online ad executives say,” he wrote. “Publishers say that while they have been out in front of the viewability issue, they are getting hit with reports from agencies and third parties claiming that significant chunks of their ad inventory are not viewable. That’s requiring these websites to deliver advertisers significant make-goods, or additional advertising to make up for deficiencies. Furthermore, properties ranging from AOL to Forbes are redesigning portions of their websites on the fly as a result,. In private conversations, many online publishers are bitter, and use harsh language to describe the current state of affairs.”

    In that article, he also notes that mobile and the wide variety of screen sizes can be a major issue when it comes to viewability. I couldn’t help but notice a comment on the article from The Mobile Majority CEO Rob Emrich, who we just interviewed about Twitter’s syndicated ads. Here’s an excerpt from his WSJ comment:

    There isn’t a simple solution for this problem, due to the complex and circuitous path by which mobile ads are built and trafficked. What’s more, the journey from creation to an actual viewed ad is perplexed by a number of moving parts managed and maintained by far too many vendors and commensurate associated fees. This drives up complexity and cost on top of media which hurts both publishers and buyers. For instance, to run any single large scale mobile campaign, a buyer would need somewhere between 4 and 10 vendors. At the very least, they would need vendors to manage strategy, creative technology, ad serving, bidding, targeting, data activation, measurement, reporting / BI and fraud detection. Every time there is a handoff, whether by computer or more often (still) by humans, of an ad from one vendor to another, there is a loss of data or at least some sort of compromise in quality. Sorting out accountability for final results becomes impossible because no one vendor can be blamed or held accountable. This leads to an opaque and broken marketplace that no one individual participant can fix.

    Not only has this created an inefficient system, a distrust in the technology itself has emerged. This is because viewability reporting is just as chaotically layered as the building of an ad. 3rd party viewability vendors often produce inconsistent viewability reports originating from different sets of available data from different layers of the full ad technology stack. This in turn confuses buyers even more and creates a compounding loss of confidence.

    Eric Wheeler, the CEO of 33Across and former Executive Director of Ogilvy Interactive North America, advises advertisers to work with viewability vendors to create verification tests and run A/B tests with ad units vs. standard IAB.

    The IAB maintains that there are major issues with vendor reporting, however. At its annual leadership meeting earlier this month, new chairman David Morris reportedly “singled out” vendor reporting as a “key problem holding the industry back on viewable impressions.” Ad Age reported:

    Mr. Morris said that publishers often find substantial differences between vendors on the same line items. “Publishers need to demand that verification companies do a better job of delivering consistent and accurate data,” he said. “To our agency partners, I say reducing the number of vendors you use will help us scale these solutions more quickly.”

    According to that same report, Morris “took pains to draw a line between” viewability and fraud. We recently looked at a report from Integral Ad Science, which explored ad viewability trends. It found that the viewability rate for publisher sourced ad inventory remained relatively unchanged at 52% during the fourth quarter, and that the level of ad fraud increased over the previous quarter, but still remained better than that of networks and exchanges.

    Viewability for display impressions sourced from networks and exchanges, it found, increased from 36.7% in Q3 to 42.6% in Q4. It attributed this to more user attention and/or increased adoption of viewability optimization technology.

    Video ads saw increased viewability, jumping nine percentage points to 39%.

    “According to Integral’s Year End Survey results published last month, 57 percent of the industry transacted based on viewability in 2014, and even more so — 73 percent — plan to do so this year,” the firm said. “Additionally, 85 percent engaged in programmatic buying, which includes real-time bidding. These activities may have led to an increase in the adoption of viewability measurement technologies by networks and exchanges, as well as optimization of media toward viewability. Perhaps as a result, viewability for display inventory was 42.6 percent in Q4, up from 36.7 percent in Q3. Ad fraud experienced a small uptick from 13.7 percent in Q3 to 14.5 percent in Q4.”

    “The fourth quarter also saw video ad viewability increase from 30 percent in Q3 to 39 percent in Q4,” it added. “Not surprisingly, completion rates while in view also rose from 20 percent to 26 percent. Brand risk for video saw a slight increase from 18.7 percent in Q3 to 20.7 percent in Q4, contributing to a noticeable decline in TRAQ, Integral’s overall media quality assessment score. This decline was also likely due to the increased supply of lower quality inventory made available to take advantage of a time when user attention and advertising demand were up.”

    Some think native ads are the way to fight low viewability. Adam Rock from Tan Media, a content marketing and native advertising agency, writes, “For advertisers running campaigns across multiple sites and publishers, it is an acknowledged struggle to compare like with like, let alone determine what percentage of ads have been viewed by the target audience. But the issues surrounding low viewability can be solved by utilising the form of true native which, unlike traditional display, can be sold on a guaranteed viewable CPM (vCPM) rate.”

    “By working with a network of publishers, and an advanced native ad platform, clients can be assured they will only be charged on a vCPM basis; when the native ad unit or article preview is in-view of the user’s browser,” he says. “And because the content is ad-served rather than manually placed through various publishers’ content management systems (CMS), scale, advanced campaign controls, and performance optimisation can be provided, while capturing ground-breaking consumer attention analytics not previously available to content marketers.”

    Demand-side platform Adform released technology this week, guaranteeing viewability for programmatic buyers, but the platform is not accredited by the MRC for its viewability measurements. DigiDay ran a sponsored article on it.

    Viewability is now digital media’s top concern, according to a different (non-sponsored) DigiDay article, which also highlights just how complicated the whole thing is, noting that some can’t even agree on what the actual disagreement is about. As one ad tech company exec said, it’s really about the value of viewability rather than viewability vs. non-viewability. How much is it worth, and will advertisers pay more or demand better for the same prices? Clearly they’re demanding, but the negotiations are going to differ vastly from publisher to publisher based on the capabilities of each.

    Either way, this issue isn’t going to go away anytime soon, and publishers should be doing what they can to increase viewability on their end. In some cases this may mean site redesigns. AdExchanger points to some sites, including The New York Times, Time.com, and National Journal, which have implemented redesigns with viewability in mind. Sometimes, it’s as simple as moving banners higher on the page.

    Katrin Ribant at Adotas has an interesting article out this week about viewability as currency, which looks at joining data sets, calculating viewability rates, and optimizing toward key performance indicators on viewable media.

    Thoughts on improving the situation? Share in the comments.

    Image via IAB (YouTube)

  • Franchise SMBs To Spend 1/2 Of 2015 Ad Budgets Online

    Franchise small and midsize businesses plan to spend about half of their annual ad budgets on digital, according to a new report from BIA/Kelsey. It found that these businesses, on average, spent $87,165 on advertising and promotion during the 12 months ahead of the survey, which is up from $57,072 the year prior. On average, they spent 39.1% of their total ad budgets on digital media during that time.

    Those same businesses said they intend to increase their digital spend to 42.9% of their total ad budget during the 12 months following the survey, which compares to 33.8% for SMBs overall.

    “Franchises are one of the most distinctive SMB segments,” said Steve Marshall, director of research, BIA/Kelsey. “In almost every metric, franchises act differently from the overall SMB sample. In general, franchises are taking a tighter and more disciplined approach to their customer relationships. They’re using more marketing tools and platforms, loyalty programs and social media.”

    BIA/Kelsey says the the businesses it surveyed “demonstrate a remarkable willingness to experiment” with digital media and platforms. When it comes to social, 26.4% use Twitter, 24.6% use Twitter ads, 15.7% use Instagram, and 11.5% use Pinterest.

    The Twitter numbers are interesting. Earlier this month, Twitter announced a new ad offering aimed at SMBs called “Quick Promote,” which lets them promote their best performing tweets from the Tweet activity dashboard.

    “Promoting a Tweet takes just a few clicks and your Tweet will automatically be targeted to users who have interests similar to your followers — the audience that is most likely to be interested in your message,” said product manager Buster Benson. “Whether you’re Tweeting about a new product, promotion or blog post, Promoted Tweets can help you drive measurable business results. In fact, we found that users who see a relevant Promoted Tweet from an SMB are also 32% more likely to visit that business.”

    If you’re a small to midsize business just getting started on Instagram, Gary Jordan of TheInstagramExpert.com recently shared some thoughts on that with us here. On the subject of Pinterest, we also spoke with with longtime Pinterest marketer Vincent Ng, and got some great tips about that.

    2.6% of those franchise SMBs surveyed by BIA/Kelsey use mobile banner or display ads, while 21.6% use mobile deals, and 19.3% use text messaging. 23.6% use online deals, while 22.6% use website video, and 16.3% use video banner or display ads.

    “Many franchise SMBs work with digital or advertising agencies, with 49.3 percent reporting they have worked with an agency for two years or more,” the firm says. “Among those that work with an agency, 87.7 percent are either ‘very satisfied’ or ‘extremely satisfied.’ The most widely used channel by franchise SMBs for purchasing online advertising is their advertising/digital agency (36.5 percent), followed by TV stations (28.9 percent), self serve without assistance (28.2 percent), self serve with assistance (27.9 percent) and newspapers (26.9 percent).”

    Take a look at this infographic they put together illustrating some of the survey’s findings:

    We recently looked at another study by BrightLocal, which found that despite finding online marketing effective, half of SMBs allocate less than 30% of their marketing budgets to online channels.

    “I found this figure a little perplexing when you consider the other responses SMBs gave,” BrightLocal CEO Myles Anderson told us in an interview. “75% said online was effective at bringing in new customers & 3 of top 4 most effective marketing channels are ‘digital’. Yet SMBs allocate a disproportionately low % of their marketing budgets online.”

    That study also found that there is a direct correlation between the number of employees the business has and the monthly online marketing budget. Here’s a look at company size vs. planned spend on internet marketing for this year:

    On Tuesday, Facebook announced that it now has over 2 million active advertisers, building on its 30 million businesses using Pages. It also launched a new Ads Manager mobile app, which will help businesses manage their budgeting from their phones (iPhone only for now, Android coming later this year).

    Facebook has not been incredibly kind to small business online marketing budgets over the past year or so. What businesses were once able to get for free, they’re now having to pay for more and more.

    We recently talked about this with Facebook marketing expert Mari Smith, who told us, “I would recommend that low budget[s] be allocated to what are called ‘dark posts.’ That is, ads in the News Feed that look like a Page wall post, but don’t actually appear on the Page. With very granular targeting to reach the exact target market, small businesses can do exceptionally well using Facebook. In addition, making use of custom audiences is a must. This is where a business can upload its own email database, or segments thereof, and place ads in the News Feed to that target group. Plus, using website custom audiences helps a business to retarget its website visitors with Facebook ads.”

    “Being able to boost (and target) posts that are already performing well is a great help to small businesses,” James Whatley, the social media director at Ogilvy & Mather Advertising, London, recently told us in another interview. “The SMEs we work with tend to put aside a small ‘slush fund’ of media spend to work into their social channels as when these opportunities arise. Definitely worth doing.”

    Here’s more on how SMBs can deal with Facebook’s recent News Feed changes.

    Image via BIA/Kelsey

  • Will Promoted Tweet Syndication ‘Torpedo’ Ad Creativity?

    Earlier this month, Twitter announced Promoted Tweet syndication, which sees the company showing its ads outside of Twitter. Promoted Tweets appear on third-party services beginning with Flipboard (which now has a desktop experience in addition to its mobile apps) and Yahoo Japan.

    This is the example Twitter showed of a Nissan ad running in the Flipboard app:

    Rob Emrich, CEO of The Mobile Majority, says Twitter is “torpedoing ad creativity” with this syndication.

    Asked to explain this, he tells WebProNews, “As it stands, Twitter’s available ad units are limited to static images with text-based descriptions, links, and calls-to-action. This offering doesn’t take advantage of the capabilities of mobile devices which can provide consumers with richer creative and increased functionality.”

    “In essence, users would be limited to seeing a static Twitter ad on a third-party site, clicking a button or link, and being taken to another site or app to continue the experience,” he says. “When compared to rich-media alternatives like inline video, add-to-calendar, and mini-games, it’s easy to imagine which people would rather engage with.”

    “That said, there is a high likelihood Twitter will also expand their newly introduced Promoted Videos outside the app’s feed and within publisher’s sites – a step in the right direction.”

    Twitter announced Promoted Video back in August before launching native video to general users last month.

    “According to this Marketing Land article, ad quality is three times more effective at driving sales than an effective media plan, five times more effective at driving ad awareness than targeting, and delivers better engagement and brand lift,” says Emrich. “Put simply: creative is the most important leverage point mobile marketers have to make an impact on their campaigns’ results.”

    “If an ad is interesting and looks good, humans will be more inclined to interact with it,” he says. “They’re more likely to remember the experience later. They are also more likely to share it, pass it along, and bring it up in conversation with other humans.”

    Will the ease of Twitter’s product ultimately reduce the effectiveness of advertisers’ campaigns?

    “Twitter’s new offering makes building and serving ads onto third-party sites simple,” says Emrich. “But simple doesn’t necessarily mean ‘good.’ Simple means easy to do. And when it comes to building engaging mobile ad creative that will engage a consumer, Twitter’s current offering falls short.”

    How can traditional advertisers find initial value from Twitter’s new syndication?

    “For smaller businesses looking to dip their toes in social and insert those same efforts into other digital properties, Twitter offers a lot of efficiencies,” he says. “Rather than duplicating copy and reformatting images across multiple platforms, Twitter allows advertisers to build it once and run in multiple formats. Less savvy traditional marketers may also see an opportunity to grow their own social followings from outside the Twitter ecosystem. Without a consistent social engagement plan, however, they may end up paying to build an asset that goes under-utilized.”

    It’s going to be interesting to see how Twitter expands its syndication program, and how big its roster of partners gets.

    “Due to brand recognition and public awareness of the platform, Twitter should have no problem expanding the number of networks and sites that want to work with them,” says Emrich. “The other side of the coin is that Twitter pays publishers for their inventory. As a result, we may see some pricing adjustments to current inventory sources (such as Google) as the market and new supply side platforms (like Twitter) expand their reach.”

    Upon announcing syndicated Promoted Tweets, Twitter said that in the third quarter of 2014, there were about 185 billion tweet impressions off of Twitter.

    “For the thousands of brands already advertising on Twitter, these new partnerships open a significant opportunity to extend the reach of their message to a larger audience. Twitter syndicated ads will be seen by users within Twitter content sections on third-party properties, as well as within third-party content areas,” said Ameet Ranadive, Senior Director of Product.

    The company says it sees the syndication as an opportunity for marketers to increase their capacity for large-scale ad campaigns on an “almost infinite” basis. The more syndication partners Twitter picks up, the more that will be true.

    Image via Twitter

  • Google Adds Call-Only Campaigns To AdWords

    Google Adds Call-Only Campaigns To AdWords

    Google announced the launch of new call-only campaigns for AdWords. These let businesses reach customers by prominently showing their phone number, business description, and a call button on the search results page.

    “People are living their lives online and engaging with your business in new ways,” says AdWords product manager Amit Agarwal. “With smartphones in hand, consumers are increasingly looking for products or services while on the go and then placing a call right away. In fact, 70% of mobile searchers call a business directly from search results.”

    “Call-only campaigns are specially designed to only show on mobile devices that can make phone calls,” he says. “This means every click you pay for can be a phone call to your business.”

    As Google notes, advertisers can simply form their bid strategies based on CPA or ROAS goals for calls as every click goes toward a phone call. The company recommends tailoring ads for calls with language like “speak to a specialist today” or “call to make an appointment”.

    Recent research from BrightLocal found that phone calls are the success metric small to midsize businesses are most concerned with.

    Image via Google

  • LinkedIn Extends Ads To Publisher Sites

    LinkedIn Extends Ads To Publisher Sites

    There’s something of a trend happening with social media advertising platforms expanding to reach customers on third-party websites away from the actual social networks themselves. LinkedIn is now joining in.

    The company announced the launch of the LinkedIn Lead Accelerator as well as the LinkedIn Network Display, which extends its platform to “thousands” of publisher sites.

    “Today LinkedIn marks a significant step in its goal to be the most effective platform for B2B marketers,” a spokesperson for the company tells WebProNews. “The company is unveiling an expanded Marketing Solutions portfolio that enables these marketers to reach, nurture and acquire professional customers — on and off the LinkedIn platform.

    “The core new product fueling this full-funnel approach is called LinkedIn Lead Accelerator, which connects companies to the right professionals with the right content throughout the complex purchase decision process,” they explain. “This addition reflects the integration and enhancement of Bizo’s Multi-Channel Nurturing product, which came as part of LinkedIn’s acquisition of the company in August 2014.”

    According to the company, 95% of website visitors never provide an email address to marketers, and of the 5% who do, only about 20% open the prospecting emails they get afterwards. Overall, it says, most marketers are converting less than 1% of possible leads.

    This is where the new Marketing Solutions Platform comes in.

    “Prior to today, products like Sponsored Updates or LinkedIn Display Advertising were used to achieve individual marketing objectives,” says LinkedIn’s Russell Glass in a blog post. “Now, with the full-funnel approach, marketers can use all of our marketing solutions products together as a portfolio to create a customized experience that enhances the marketer-prospect relationship and delivers results.”

    Marketers can get started with the new tools here.

    Image via LinkedIn

  • Facebook Releases New Product Ads

    Facebook Releases New Product Ads

    Facebook announced new product ads designed to help businesses promote multiple products or their whole product catalogs. The ads are shown across devices.

    “Product ads offer businesses a number of ways to highlight different products on Facebook,” the company says. “Marketers can upload their product catalog and create campaigns targeting certain products to specific audiences, or let Facebook automatically deliver the most relevant products to people. Products can be shown in single- or multi-product ad units.”

    “Product ads can be customized for use throughout the customer journey, from discovery/awareness through purchase,” it adds. “Here are some options: Advertisers can automatically reach people who visited their website/app (via Custom Audiences), or reach people based on specific interests, locations, etc. Advertisers can curate ads as they see fit. For instance, they can highlight products that were viewed on their website/mobile app or showcase best selling products. Or they can create a multi-product ad that highlights the different benefits of a single product.”

    Shutterfly CMO John Boris said, “The multi-product ad unit allowed us to display a variety of products we offer at Shutterfly in a clean, engaging way. The ability to control product order placement offered gifting inspiration for our current customers and created a natural introduction of products for our new customers, resulting in a 20%+ increase in click through rate.”

    The ads are available now in the API through Facebook Marketing Partners. They will roll out in Power Editor over the coming weeks.

    Image via Facebook

  • Cinemagraphs Could Be the Next Big Thing in Facebook Advertising

    Facebook, a company that makes its money selling ad space, has the same problem that everyone who deals in advertising has. How do I capture the consumer’s attention? Or, more aptly put, how do I make people stop and give a damn – if just briefly?

    Advertising on Facebook has evolved over the years to include the rather in-your-face tactic that’s currently being employed – autoplay, in-feed videos. First, there were sponsored photo posts – which were static. Then, there were videos – which move about at an often startling pace.

    It’s the kind of jarring assault that makes the average user want to scroll, and scroll away as fast as they can.

    But could there be another type of in-feed ad, one that moves enough to capture the eye but is subtle and – dare I say – pleasing? Apparently, Facebook is putting its weight behind the cinemagraph.

    You’ve likely seen cinemagraphs floating around the internet for years now. Basically, cinemagraphs are still photographs that feature a very small, controlled element of movement from one aspect of the frame. Like this:

    The technique of creating cinemagraphs has been around for some time, but the term was coined (and trademarked) by photographers Jamie Beck and Kevin Burg in 2011.

    And apparently, that’s who many high-profile companies are tapping to create their cinemagraphs. Adweek reports that Burg and Beck have been in talks with Facebook about cinemagraphs, and that Burg and Beck have “had all kinds of new inquiries [from brands].”

    Here’s what a cinemagraph ad could look like on Facebook. This is a cinemagraph that Burg and Beck’s Ann Street Studio created for Ecco Domani wine:

    Much more aesthetically pleasing than an autoplay ad, you have to admit.

    “You’re going to start seeing a ton of these on Facebook,” an advertising executive told Adweek. They say they know this because they’ve seen “a guide produced by Facebook for marketers called ‘Hacking Facebook Autoplay.’”

    Facebook’s autoplay feature in the News Feed is a powerful one for marketers – but right now it’s only being used bluntly. Something like a cinemagraph could make use of the autoplay feature and still keep users from scrolling by in abject horror.

    Images via Johan Blomstrom, Wikimedia Commons, Ann Street Studio

  • Facebook Gives Advertisers Relevance Scores For Their Ads

    Facebook announced that it will start showing relevance scores as a visible metric in its ads reporting tools. The social network has always used the metric to deliver ads to users, but it hasn’t made the scores visible to the advertisers until now.

    Facebook advertisers will now see something that looks like this when they’re looking at their reports:

    The company says the score is based on positive and negative feedback it expects an ad to receive from its target audience. It says positive indicators vary depending on the objective of the ad, but include things like video views, conversions, etc. (yes the inconvenient “etc.”). If Facebook expects people to hide or report an ad, that will negatively impact the score.

    The scale is one to ten, and scores are updated as people interact with and provide feedback on the ad. If an ad has guaranteed delivery (such as those bought through reach and frequency), it won’t actually be affected by the relevance score. The score also has a smaller impact on cost and delivery in brand awareness campaigns, the company says, as those types of ads are aimed at reaching people rather than driving specific actions.

    According to Facebook, relevance score can lower the cost of reaching people, help advertisers test creative options before running a campaign, and help optimize campaigns that are already in progress.

    “Put simply, the higher an ad’s relevance score is, the less it will cost to be delivered. This is because our ad delivery system is designed to show the right content to the right people, and a high relevance score is seen by the system as a positive signal,” the company says in a blog post. “Of course, relevance isn’t the only factor our ad delivery system considers. Bid matters too. For instance, if two ads are aimed at the same audience, there’s no guarantee that the ad with an excellent relevance score and low bid will beat the ad with a good relevance score and high bid. But, overall, having strong relevance scores will help advertisers see more efficient delivery through our system.”

    The company notes that relevance score shouldn’t be considered the primary indicator of an ad’s performance.

    “As has long been the case on Facebook, the most important factor for success is bidding based on the business goal you hope to meet with an ad,” it says. “Say, for instance, you own a pizza shop and want to run a campaign that drives people to order through your website. Achieving the desired outcome — in this case, driving sales online — is ultimately more important than your relevance score. If you have an average score but your ad is working, you may not want to change anything. Or you may consider tweaking the ad to see how you can get lower cost of delivery by improving the relevance score. Or you might monitor your relevance score, along with the sales you’re driving, to learn when it’s time to update your campaign.”

    The scores are rolling out globally beginning this week. You’ll be able to find it in any of Facebook’s ad reporting tools as well as those developed by its API partners.

    Image via Facebook

  • Auction Insights Launched For Bing Ads In All Markets

    Microsoft announced Auction Insights for the Bing Ads web user interface back in November. At the time, it was a U.S. only release. On Monday, the company announced that the feature is being expanded to all Bing Ads markets.

    The feature enables advertisers to see how they’re performing in comparison to other advertisers who are participating in the same auctions.

    “It can help you make strategic decisions about bidding and budgeting choices by showing you where you are succeeding and where you may be missing opportunities for improved performance,” says Microsoft’s Lei Wu. The Auction Insights report is available directly on your Campaigns page. Check your report by clicking the ‘Details’ drop-down menu and selecting either ‘Selected’ or ‘All’ under ‘Auction insights’ section. You can generate a report for one or more keywords, ad groups and campaigns that meet a minimum threshold of activity. It also provides the flexibility for you to quickly build an aggregate view with the selected time range.”

    “The competing websites listed in your Auction Insights report are those that enter the same auctions as you and are eligible for the same impressions that you are. Competitors aren’t necessarily determined by how similar their keywords, match types, or other targeting settings are to your own. This report will not reveal the actual keywords, quality, bids, or setting from your campaigns, and it will not give you insight into the same information for others.”

    The Auction Insights report can also be utilized from the Bing Ads Intelligence Excel add-in.

    Image via Microsoft

  • Yelp Is Beefing Up Its Sales Staff

    Yelp Is Beefing Up Its Sales Staff

    Yelp released its earnings report for the fourth quarter and full year 2014 on Thursday, and as previously reported, the company grew its local advertising accounts by 48% over the course of 2014.

    Yelp execs discussed the progress of its ad offerings quite a bit during a conference call. The company intends to increase its sales headcount by 40% this year. This will mostly be in the U.S. despite the company’s international growth efforts (it launched in five new countries in 2014).

    The news is sure to draw some eye rolls from those accusing Yelp salespeople of extorting them by holding positive reviews hostage (allegations that have never been proven and that Yelp has always successfully combated on a legal basis). Yelp announced last month that the FTC closed an investigation related to this without taking any action against the company.

    “Many of those folks [salespeople] tend to come to us either straight out of college or within a few years thereafter, but we take all comers and there’s all different kinds of folks,” said COO and Director Geoff Donaker on the conference call (via Seeking Alpha’s transcript). “But it is a sales training program and so most of that headcount is folks who are reaching out to local businesses of different stripes. Of course, within that number, there is some international and there is some sort of specialty sales and mid-market franchise and national accounts, but the majority of it is kind of traditional local sales headcount here in the U.S.”

    Donaker noted that while Yelp has traditionally focused on selling impressions-based packages, it made its packaged CPC product widely available in September. He said they’re happy with the “fast uptake” of that, and that CPC advertisers accounted for 32% of local revenue during the fourth quarter (up from 23% in Q3).

    “The next logical step in our closing-the-loop efforts is to connect advertising spend all the way through to customer leads and spending,” said Donaker. “We are now tracking these ad-driven leads and associated revenue estimates for all advertisers, and we’ll be making this data available in our business owner tools in the coming quarters.”

    He mentioned that local CPC customers experience an average ROI of over 500% on their Yelp ad spend.

    Yelp has also seen increased growth from those utilizing its self-serve ads. More and more people are starting their advertising process there, and then electing to call up Yelp salespeople, Donaker said.

    “Taken together, we believe that most business owners will continue to prefer consulting with our sales people, though many of these conversations may increasingly be what we think of as assisted self-serve,” he said.

    In response to a question from an analyst, Donaker said Yelp has “an awful lot” of unused or unsold ad inventory.

    “Also, we’re seeing that in some more competitive categories or geo categories, if you will,” he said. “We do see that prices quickly rise within packaged CPC because that is an auction-based dynamic where folks effectively are bringing in an amount of money that they’re going to spend on CPC advertising and then leaving it to the bidding to determine what the prices will ultimately be for that inventory. And so you can imagine tight categories like movers in San Francisco, those prices are able to move up pretty quickly. So I think there is headroom in both price as well as inventory generally.”

    One analyst noted that core search players are recommending bids at about 2x the levels of Yelp.

    “We noticed the same thing as we’ve done a little bit of benchmarking, and it obviously gives us comfort with both the ROI that we’re giving to advertisers today as well as the headroom in those categories for pricing,” Donaker responded. “And so the simple answer is just acquisition, and that’s why we continue to be focused on bringing in as many CPC advertisers as we can because over time, more competition should mean prices will rise as well as, hopefully, more happy customers.

    At one point, CEO Jeremy Stoppelman noted that more than half of Yelp’s advertisers are taking advantage of video offerings.

    Image via Yelp

  • Yelp Grew Local Advertising Accounts 48% Over 2014

    Yelp just released its earnings report for the fourth quarter and full year 2014. Net revenue for the quarter grew 56% year-over-year as the company grew local advertising accounts by 48% to approximately 84,000.

    To be clear, Yelp considers local advertising accounts to be all local business accounts from which it recognizes local revenue in a given three-month period.

    Cumulative reviews grew 35% to about 71 million while average monthly unique visitors grew 13% to 135 million. Average monthly mobile uniques grew 37% to 72 million. Active local business accounts grew 39% year over year to 93,700.

    Last week, Yelp dropped the hammer on another round of businesses it says were violating its guidelines. It dished out consumer alerts to 85 business pages warning users about practices they claim to have discovered.

    Here’s Yelp’s earnings release in its entirety:

    SAN FRANCISCO, Feb. 5, 2015 /PRNewswire/ — Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the fourth quarter and full year ended December 31, 2014.

    • Net revenue was $109.9 million in the fourth quarter of 2014, reflecting 56% growth over the fourth quarter of 2013
    • Cash flow from operations was $18.9 million in the fourth quarter. Adjusted EBITDA for the fourth quarter of 2014 was $25.1 million, reflecting a nearly 150% increase over the fourth quarter of 2013
    • Cumulative reviews grew 35% year over year to approximately 71 million
    • Average monthly unique visitors grew 13% year over year to approximately 135 million1 and average monthly mobile unique visitors grew 37% year over year to approximately 72 million2
    • Active local business accounts grew 39% year over year to approximately 93,700
    • Local advertising accounts grew 48% year over year to approximately 84,0003

    Net income in the fourth quarter of 2014 was $32.7 million, or $0.42 per share, compared to a net loss of$(2.1) million, or $(0.03) per share, in the fourth quarter of 2013. Net income for the fourth quarter of 2014 included an income tax benefit of $26.2 million, or $0.34 per share, due to the release of a deferred tax asset valuation allowance.

    Net revenue for the full year ended December 31, 2014 was $377.5 million, an increase of 62% compared to $233.0 million in the prior year. Net income for the full year ended December 31, 2014 was $36.5 million, or $0.48 per share, compared to a net loss of $(10.1) million, or $(0.15) per share, in 2013. Adjusted EBITDA for the full year 2014 was $70.9 million compared to $29.4 million for the prior year.

    Non-GAAP net income, which consists of net income excluding stock-based compensation, amortization and valuation allowance release, was $18.9 million for the fourth quarter, or $0.24 per share, compared to $7.3 million, or $0.11 per share, in the fourth quarter of 2013. Non-GAAP net income for the full year endedDecember 31, 2014 was $53.0 million, or $0.69 per share, compared to $18.3 million, or $0.28 per share, for the comparable period in 2013.

    “We are extremely pleased with our accomplishments in 2014, having made great progress on the key initiatives we set at the beginning of the year,” said Jeremy Stoppelman, Yelp’s chief executive officer. “We continued to support the Yelp community with numerous improvements to the consumer experience, expanded our geographic footprint and found new ways to communicate the valuable leads we deliver to local businesses. As we move into 2015, we will look to drive mobile engagement by making Yelp even more useful for everyday consumer needs, increase awareness of Yelp among consumers and deliver and measure ROI for our advertisers. We see a vast market opportunity ahead of us and look forward to capturing more advertising spend as it shifts online.”

    “This past year marked an important milestone for Yelp,” added Rob Krolik, Yelp’s chief financial officer. “We achieved full year profitability for the first time while growing revenue in excess of 60% in 2014 and generating operating cash flow of approximately $58 million. Given the leverage we’ve seen in the business and the large opportunity ahead of us, we believe we can achieve adjusted EBITDA margins of 35-40% over the long term.”

    Business Highlights

    • Closing the loop with businesses:  Yelp continued to increase the value it delivers to business owners with the launch of the Yelp for Business Owners app to help business owners interact with Yelp consumers and view their business metrics on-the-go. In the fourth quarter, consumers made approximately 350,000 transactions through Yelp Platform. Now, Yelp has more than 60,000 businesses integrated into Yelp Platform through its 12 partners, enabling even more transactions.
    • International expansion:  Yelp launched in five new countries in 2014, expanding its global footprint to 29 countries around the world. Consumers are now able to use the mobile translation feature to read Yelp content in 16 different languages. In the fourth quarter, Yelp acquired review sites Restaurant-Kritik and Cityvox to deepen and broaden its content in Europe.
    • Community engagement:  Consumer and community engagement continued to grow in 2014 as new features such as video uploads, Yelp Reservations and Message the Business were added to enhance the consumer experience. In the fourth quarter, mobile app contributions rose to approximately 58% of reviews and photos posted.

    Business Outlook

    As of today, Yelp is providing its outlook for the first quarter and full year of 2015.

    • For the first quarter of 2015, net revenue is expected to be in the range of $114 million to $116 million, representing growth of approximately 51% compared to the first quarter of 2014. Adjusted EBITDA is expected to be in the range of $19 million to $21 million. Stock-based compensation is expected to be in the range of $12 million to $13 million, and depreciation and amortization is expected to be approximately 4-5% of revenue.
    • For the full year of 2015, net revenue is expected to be in the range of $538 million to $543 million, representing growth of approximately 43% compared to full year 2014. Adjusted EBITDA is expected to be in the range of $100 million to $103 million. Stock-based compensation is expected to be in the range of $58 million to $60 million, and depreciation and amortization is expected to be approximately 4-5% of revenue.

    Quarterly Conference Call

    To access the call, please dial 1 (800) 708-4539, or outside the U.S. 1 (847) 619-6396, with Passcode 38800596, at least five minutes prior to the 1:30 p.m. PT start time.  A live webcast of the call will also be available at http://www.yelp-ir.com under the Events & Presentations menu.  An audio replay will be available between 4:00 p.m. PT February 05, 2015 and 11:59 p.m. PT February 12, 2015 by calling 1 (888) 843-7419 or 1 (630) 652-3042, with Passcode 38800596.  The replay will also be available on the Company’s website at http://www.yelp-ir.com.

    About Yelp

    Yelp Inc. (http://www.yelp.com) connects people with great local businesses. Yelp was founded in San Francisco in July 2004. Since then, Yelp communities have taken root in major metros across 29 countries. Yelp had a monthly average of approximately 135 million unique visitors during the fourth quarter of 20141. By the end of the same quarter, Yelpers had written approximately 71 million local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists. Approximately 72 million unique visitors visited Yelp via their mobile device on a monthly average basis during the fourth quarter of 20142.

    1 Source: “Users” as measured by Google Analytics

    2 Average monthly mobile unique visitors based on the number of unique visitors accessing Yelp via mobile web and unique devices accessing the app on a monthly average basis over a given three-month period.

    3 Local advertising accounts comprise all local business accounts from which we recognize Local revenue in a given three-month period.

    Non-GAAP Financial Measures

    This press release includes information relating to Adjusted EBITDA and Non-GAAP net income, each of which the Securities and Exchange Commission has defined as a “non-GAAP financial measures.” Adjusted EBITDA and Non-GAAP net income have been included in this press release because they are key measures used by the Company’s management and board of directors to understand and evaluate core operating performance and trends, to prepare and approve its annual budget and to develop short- and long-term operational plans. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”).

    Adjusted EBITDA and Non-GAAP net income have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of the Company’s results as reported under GAAP. Some of these limitations are:

    • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA and Non-GAAP net income do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
    • adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;
    • adjusted EBITDA and Non-GAAP net income do not consider the potentially dilutive impact of equity-based compensation;
    • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
    • adjusted EBITDA does not take into account restructuring and integration costs associated with our acquisition of Qype;
    • and other companies, including those in the Company’s industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

    Because of these limitations, you should consider adjusted EBITDA and Non-GAAP net income alongside other financial performance measures, including various cash flow metrics, net income (loss) and the Company’s other GAAP results. Additionally, the Company has not reconciled its adjusted EBITDA outlook for the first quarter and full year 2015 to its net income (loss) outlook because it does not provide an outlook for other income (expense) and provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of the Company’s control and cannot be reasonably predicted, the Company is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the first quarter and full year 2015 is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the Non-GAAP reconciliations included below in this press release.

    Forward-Looking Statements

    This press release contains forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on the Company’s current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the first quarter and full year 2015, the Company’s potential adjusted EBITDA margins over the long term, the future growth in Company revenue and continued investing by the Company in its future growth, the Company’s ability to drive mobile engagement, increase awareness of Yelp  among consumers, deliver and measure ROI for our advertisers, expand geographically and build Yelp communities internationally and expand its markets and presence in existing markets, the Company’s ability to capture the large local opportunity and more advertising spend and develop new ways to close the loop with local businesses. The Company’s actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: the Company’s short operating history in an evolving industry; the Company’s ability to generate sufficient revenue to maintain profitability, particularly in light of its significant ongoing sales and marketing expenses; the Company’s ability to successfully manage acquisitions of new businesses, solutions or technologies, including Qype and SeatMe, and to integrate those businesses, solutions or technologies; the Company’s reliance on traffic to its website from search engines like Google and Bing; the Company’s ability to generate and maintain sufficient high quality content from its users; maintaining a strong brand and managing negative publicity that may arise; maintaining and expanding the Company’s base of advertisers; changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates; the Company’s ability to deal with the increasingly competitive local search environment; the Company’s need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the competitive and regulatory environment while the Company continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; the Company’s ability to timely upgrade and develop its systems, infrastructure and customer service capabilities. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

    More information about factors that could affect the Company’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Quarterly Report on Form 10-Q at http://www.yelp-ir.com or the SEC’s website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the Company on the date hereof. Yelp assumes no obligation to update such statements. The results we report in our Annual Report on Form 10-K for the three months and year ended December 31, 2014 could differ from the preliminary results we have announced in this press release.

    Investor Relations Contact Information
    Yelp Investor Relations
    Wendy Lim
    (415) 568-3240 
    [email protected]

     

    Yelp Inc
    Condensed Consolidated Balance Sheets
    (In thousands)
    (Unaudited)
               
        December 31,     December 31,
        2014     2013
    Assets          
    Current assets:          
    Cash and cash equivalents   $        247,312     $        389,764
    Short-term marketable securities   118,498     –
    Accounts receivable, net   35,593     21,317
    Prepaid expenses and other current assets 19,355     5,752
    Total current assets   420,758     416,833
               
    Long-term marketable securities   38,612     –
    Property, equipment and software, net   62,761     30,666
    Goodwill   67,307     59,690
    Intangibles, net   5,786     5,235
    Restricted cash   17,943     3,247
    Other assets   16,483     306
    Total assets   $        629,650     $        515,977
               
    Liabilities  and stockholders’ equity           
    Current liabilities:          
    Accounts payable   $            1,398     $            3,364
    Accrued liabilities   29,581     19,004
    Deferred revenue   2,994     2,621
    Total current liabilities   33,973     24,989
    Long-term liabilities   7,527     4,505
    Total liabilities   41,500     29,494
               
    Commitments and contingencies           
               
    Stockholders’ equity          
    Common stock   –     –
    Additional paid-in capital   627,742     553,753
    Accumulated other comprehensive  income (5,609)     3,186
    Accumulated deficit   (33,983)     (70,456)
    Total stockholders’ equity   588,150     486,483
    Total liabilities and stockholders’ equity   $         629,650     $         515,977

     

    Yelp Inc        
    Condensed Consolidated Statements of Operations        
    (In thousands, except per share amounts)        
    (Unaudited)        
        Three Months Ended   Twelve Months Ended
        December 31,   December 31,
        2014   2013   2014   2013
                     
    Net revenue   $ 109,887   $ 70,651   $ 377,536   $ 232,988
                     
    Cost and expenses                
    Cost of revenue (1)   7,286   4,926   24,382   16,561
    Sales and marketing (1)   53,580   38,847   201,050   131,970
    Product development (1)   19,076   11,802   65,181   38,243
    General and administrative (1)   16,662   13,460   58,274   42,907
    Depreciation and amortization   5,291   3,524   17,590   11,455
    Restructuring and integration (1)   –   –   –   675
                     
    Total cost and expenses   101,895   72,559   366,477   241,811
    Income (Loss) from operations   7,992   (1,908)   11,059   (8,823)
    Other income (expense), net   38   (109)   221   (407)
    Income (Loss) before provision for income taxes   8,030   (2,017)   11,280   (9,230)
    Benefit (Provision) for income taxes   24,698   (52)   25,193   (838)
    Net income (loss) attributable to common stockholders   $   32,728   $ (2,069)   $   36,473   $ (10,068)
                     
    Net income (loss) per share attributable to common stockholders:                
    Basic   $       0.45   $   (0.03)   $       0.51   $     (0.15)
    Diluted   $       0.42   $   (0.03)   $       0.48   $     (0.15)
                     
    Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:                
    Basic   72,645   68,847   71,936   65,665
    Diluted   77,211   68,847   76,712   65,665
                     
                     
                     
    (1) Includes stock-based compensation expense as follows:                
        Three Months Ended   Twelve Months Ended
        December 31,   December 31,
        2014   2013   2014   2013
    Cost of revenue   $        207   $      140   $        729   $        421
    Sales and marketing   3,995   3,201   15,003   10,131
    Research and development   4,551   2,705   14,884   6,270
    General and administrative   3,063   2,743   11,657   9,300
    Restructuring and integration   –   –   –   555
    Total stock-based compensation   $   11,816   $   8,789   $   42,273   $   26,677

     

    Yelp Inc
    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
        Year Ended
        December 31,
        2014   2013
    Operating activities        
    Net income (loss)   $        36,473   $ (10,068)
     Adjustments to reconcile net income (loss) to net cash provided by
     (used in) operating activities:    		        
    Depreciation and amortization   17,590   11,455
    Provision for doubtful accounts and sales returns   7,238   3,304
    Stock-based compensation   42,273   26,677
    Release of valuation allowance   (28,197)   –
    (Gain) loss on disposal of assets and website development costs   4   159
      Premium amortization, net, on securities held-to-maturity   349   –
    Excess tax benefit from share-based award activity   (1,834)   (353)
             
    Changes in operating assets and liabilities:        
    Accounts receivable   (21,291)   (12,843)
    Prepaid expenses and other assets   (4,011)   (1,572)
    Accounts payable, accrued expenses and other liabilities   8,927   4,971
    Deferred revenue   411   (298)
    Net cash provided by (used in) operating activities   57,932   21,432
             
    Investing activities        
    Acquisitions, net of cash received   (14,340)   (2,057)
    Purchases of property, equipment and software   (29,054)   (16,243)
    Capitalized website and software development costs   (11,349)   (4,856)
    Change in restricted cash   (14,764)   3,176
    Purchase of intangibles   (1,724)   –
    Proceeds from sale of property and equipment     14   –
    Goodwill measurement period adjustment   –   1,153
    Purchases of investment securities held-to- maturity   (210,459)   –
    Maturities of investment securities held-to-maturity   53,002   –
    Cash used in investing activities   (228,674)   (18,827)
             
    Financing activities        
    Proceeds from follow-on offering, net of offering costs   –   276,527
    Proceeds from issuance of common stock from share-based awards   20,164   13,554
    Proceeds from issuance of common stock for Employee Stock Purchase Plan   8,869   1,960
    Excess tax benefit from share-based award activity   1,834   353
    Repurchase of common stock   (1,318)   (674)
             
    Net cash provided by financing activities   29,549   291,720
             
    Effect of exchange rate changes on cash and cash equivalents   (1,259)   315
             
    Net increase in cash and cash equivalents   (142,452)   294,640
    Cash and cash equivalents at beginning of period   389,764   95,124
    Cash and cash equivalents at end of period   247,312   $ 389,764

     

      Yelp Inc      
      Reconciliation of GAAP to Non-GAAP Financial Measures      
      (In thousands)      
      (Unaudited)      
                       
          Three Months Ended   Twelve Months Ended
          December 31,   December 31,
          2014   2013   2014   2013
                       
    Adjusted EBITDA:                
      Net income (loss)   $ 32,728   $ (2,069)   $ 36,473   $ (10,068)
      (Benefit) Provision for income taxes   (24,698)   52   (25,193)   838
      Other (income) expense, net   (38)   109   (221)   407
      Depreciation and amortization   5,291   3,524   17,590   11,455
      Stock-based compensation   11,816   8,789   42,273   26,122
      Restructuring and integration   –   –   –   675
      Adjusted EBITDA   $ 25,099   $ 10,405   $ 70,922   $  29,429
                       
    GAAP net income (loss) to non-GAAP net income per share:          
      GAAP net income (loss) attributable to common Shareholders   $32,728   $(2,069)   $36,473   $(10,068)
         Add back: stock-based compensation 11,816   8,789   42,273   26,122
         Add back: amortization of intangible assets 550   620   2,448   2,260
         Add back: valuation allowance release (26,197)   –   (28,197)   –
      NON-GAAP NET INCOME    $18,897   $  7,340   $52,997   $ 18,314
                       
      GAAP diluted shares   77,211   68,847   76,712   65,665
                       
    NON-GAAP NET INCOME  PER SHARE $    0.24   $    0.11   $    0.69   $     0.28

     

    Logo – http://photos.prnewswire.com/prnh/20050511/SFW134LOGO

     

     

    SOURCE Yelp Inc.

     

  • Instagram Videos Now Loop Continuously

    Instagram Videos Now Loop Continuously

    There’s a new version of Instagram out, and with it comes a small but important change to videos.

    Videos on instagram will now auto-replay in your feeds. According to Instagram, this will not affect how much data the app uses.

    Vine has been doing this since the beginning, and the constant looping is part of the app’s appeal. Case in point:

    Apart from making it easier for users to rewatch videos, why would Instagram make this change?

    Advertising, of course. It’s not just your buddy’s videos that will now loop on an endless repeat if left to do so, it’s also the video from major brands.

    Instant replay of that interception:

    A video posted by Taylor Swift (@taylorswift) on

  • Twitter Advertising Just Got Easier For SMBs

    Twitter just announced a new ad offering aimed at small and medium-sized businesses. It’s called Quick Promote, and lets advertisers promote their best performing tweets from the Tweet Activity dashboard.

    “Since we launched our self-service ad platform in 2013, we’ve developed a range of products to help SMBs accomplish their marketing goals,” says product manager Buster Benson. “Last year, we rolled out objective-based campaigns, reports and pricing to make it simpler for businesses to manage campaigns, while only paying for actions aligned with their marketing objectives. And in July, we made organic Tweet analytics available to help advertisers of all sizes improve their content strategy.”

    “Promoting a Tweet takes just a few clicks and your Tweet will automatically be targeted to users who have interests similar to your followers — the audience that is most likely to be interested in your message,” Benson says. “Whether you’re Tweeting about a new product, promotion or blog post, Promoted Tweets can help you drive measurable business results. In fact, we found that users who see a relevant Promoted Tweet from an SMB are also 32% more likely to visit that business.”

    To use Quick Promote, log into the Tweet Activity dashboard, select the tweet you wish to promote, and chose a budget. Twitter will give you an estimate of the reach you’ll see after you promote the tweet. It also enables you to watch engagement with the tweet in real-time.

    The new feature is available to all SMB advertisers.

    Earlier this week, Twitter announced Promoted Tweet syndication, which sees Promoted Tweets from advertisers appear on third-party websites like Flipboard and Yahoo Japan (with more to come).

    Image via YouTube

  • Report Looks At Ad Viewability Trends, Fraud

    Report Looks At Ad Viewability Trends, Fraud

    The viewability rate for publisher sourced ad inventory remained relatively unchanged at 52% during the fourth quarter, according to a new report from Integral Ad Science. Meanwhile, the level of ad fraud increased over the previous quarter, but still remained better than that of networks and exchanges.

    Viewability for display impressions sourced from networks and exchanges, it found, increased from 36.7% in Q3 to 42.6% in Q4. It attributes this to more user attention and/or increased adoption of viewability optimization technology.

    Video ads saw increased viewability, jumping nine percentage points to 39%.

    “According to Integral’s Year End Survey results published last month, 57 percent of the industry transacted based on viewability in 2014, and even more so — 73 percent — plan to do so this year,” the firm says. “Additionally, 85 percent engaged in programmatic buying, which includes real-time bidding. These activities may have led to an increase in the adoption of viewability measurement technologies by networks and exchanges, as well as optimization of media toward viewability. Perhaps as a result, viewability for display inventory was 42.6 percent in Q4, up from 36.7 percent in Q3. Ad fraud experienced a small uptick from 13.7 percent in Q3 to 14.5 percent in Q4.”

    “The fourth quarter also saw video ad viewability increase from 30 percent in Q3 to 39 percent in Q4,” it adds. “Not surprisingly, completion rates while in view also rose from 20 percent to 26 percent. Brand risk for video saw a slight increase from 18.7 percent in Q3 to 20.7 percent in Q4, contributing to a noticeable decline in TRAQ, Integral’s overall media quality assessment score. This decline was also likely due to the increased supply of lower quality inventory made available to take advantage of a time when user attention and advertising demand were up.”

    You can find the full report here.

    In December, the Interactive Advertising Bureau (IAB) released its “State of Viewability Transaction 2015″ report aimed at offering guidance on how to manage the “shift of digital media’s ‘audience currency’ to 100 percent viewability.”

    It said 100% viewability measurement simply isn’t possible. Instead, it recommends 70% as the best threshold for buyers and sellers. 2015, it says, will be a “year of transition.”

    Image via Integral Ad Science

  • Google Touts Its Efforts To Combat Bad Ads

    Google released a new infographic looking at how it fought “bad advertising” on the web in 2014. If you’ll recall, Google released this video about how it makes ads safer back in 2012:

    The infographic is the latest look at its efforts on that front. The company says it banned 7,000 advertisers promoting counterfeit goods (down from 14,000 in 2013 and 82,000 in 2012). It removed 250,000 sites from its network for hiding forms of malware. Along with AOL, Yahoo, and others, it also removed or rejected over 2.5 million ads related to weight loss and dietary supplements over the past 18 months.

    “While many advertisers selling dietary supplements provide accurate information, some bad actors use outrageous claims to entice consumers,” Google notes.

    “Overall, we disabled more than 524 million bad ads and banned more than 214,000 advertisers in 2014. While this represents a tiny fraction of the total ads on our platform – the vast majority of advertisers follow our policies and act responsibly – we continue to remain vigilant to protect users against bad advertising practices,” Google says.

    Google offers a feedback form for specific ads or its policies here.

  • Twitter’s Promoted Tweets Get Syndicated

    Twitter just announced Promoted Tweet syndication, which sees the company showing its ads outside of Twitter. This is starting with Flipboard and Yahoo Japan.

    There’s no question that Internet users experience Twitter in many places beyond Twitter itself, so it make sense that Twitter would try to apply that to Promoted Tweets.

    “What makes Twitter unique is that Tweets can flow from Twitter to other mediums seamlessly, like TV, websites, and mobile applications,” says Ameet Ranadive, Senior Director of Product. “In fact, in the third quarter of 2014 there were approximately 185 Billion Tweet impressions off of Twitter. For the thousands of brands already advertising on Twitter, these new partnerships open a significant opportunity to extend the reach of their message to a larger audience. Twitter syndicated ads will be seen by users within Twitter content sections on third-party properties, as well as within third-party content areas.”

    “For example, let’s say Nissan is running a Promoted Tweet campaign on Twitter, but also trying to reach similar audience on a mobile application like Flipboard,” Ranadive adds. “Through this new partnership, Nissan could run a Promoted Tweet campaign on Twitter, with specific creative and targeting, and simultaneously run the campaign off Twitter, with the same targeting and creative in the Flipboard app. Best of all, because Flipboard already integrates organic Tweets into the app, the Promoted Tweet will have the same look and feel that is native to the Flipboard experience.”

    Twitter says it sees the syndication as an opportunity for marketers to increase their capacity for large-scale ad campaigns on an “almost infinite” basis. The more syndication partners Twitter picks up, the more that will be true.

    Advertisers interested in taking advantage of syndicated Promoted Tweets are told to contact their account representative. Publishers interested in partnering can email the company at [email protected].

    Image via Twitter

  • Here’s How The Top Super Bowl Ads Played On Social Media

    So, were you wondering which of last night’s Super Bowl ads got the most buzz on social media? Engagor has put together an infographic looking at the top five, as well as total Super Bowl ad mentions across Twitter and Facebook, the top hashtags, the top engaging advertisers, and some other takeaways.

    The highly anticipated Super Bowl commercials once again got people breaking out the tissue box and debating the best celebrity endorser, while others got a big yawn,” a spokesperson for Engagor tells WebProNews.

    The top 5 buzzing ads part is interesting, as only one of them – Nationwide – was buzzing with primarily dislikes. That was what’s become known as the dead kid ad, which also partially inspired what seems to be the biggest meme from the Super Bowl:

    Yahoo Tech reports on the software developer responsible for that one. I bet at least one person at Nationwide wishes GoDaddy went with its original commercial.

    Here’s what’s happening on Nationwide’s timeline though:


    Twitter proclaimed McDonald’s the winner of its #TopSpot competition for the following tweet:

    The top three also included these:

    Here’s a cool visualization looking at the buzz around each of these three tweets over time:

  • Facebook Grew Mobile Daily Active Users By 34% Over The Past Year

    Facebook Grew Mobile Daily Active Users By 34% Over The Past Year

    Facebook just released its earnings report for the fourth quarter and full year. It posted a 58% increase in yearly revenue, and a 49% increase for the quarter.

    “We got a lot done in 2014. Our community continues to grow and we’re making progress towards connecting the world,” said Mark Zuckerberg.

    As usual, the company gave an update on its user stats. As of December, it had an average of 890 million daily active users, which is up 18% year-over-year. At the same time it had 745 million mobile daily active users, which is a 34% year-over-year increase. That’s a lot more people using Facebook every day from their mobile devices.

    Monthly active users were 1.39 billion for December, up 13% year-over-year, and mobile monthly actives were 1.19 billion, up 26%.

    Facebook’s quarterly ad revenue was up 53% from the same quarter the previous year at $3.59 billion. A whopping 69% of that came from mobile ad revenue. That’s up from 53% the previous year.

    Here’s the release in its entirety:

    MENLO PARK, Calif., Jan. 28, 2015 /PRNewswire/ — Facebook, Inc. (NASDAQ: FB) today reported financial results for the fourth quarter and full year ended December 31, 2014.

    “We got a lot done in 2014. Our community continues to grow and we’re making progress towards connecting the world,” said Mark Zuckerberg, Facebook founder and CEO.

     

    Fourth Quarter and Full Year 2014 Financial Summary
    Three Months Ended December 31, Year Ended December 31,
    In millions, except percentages and per share amounts 2014 2013 2014 2013
    Revenue $ 3,851 $ 2,585 $ 12,466 $ 7,872
    Income from Operations
       GAAP $ 1,133 $ 1,133 $ 4,994 $ 2,804
       Non-GAAP* $ 2,219 $ 1,498 $ 7,207 $ 3,948
    Operating Margin
       GAAP 29% 44% 40% 36%
       Non-GAAP* 58% 58% 58% 50%
    Net Income
       GAAP $ 701 $ 523 $ 2,940 $ 1,500
       Non-GAAP* $ 1,518 $ 814 $ 4,713 $ 2,334
    Diluted Earnings per Share (EPS)
       GAAP $ 0.25 $ 0.20 $ 1.10 $ 0.60
       Non-GAAP* $ 0.54 $ 0.32 $ 1.77 $ 0.93
    * Non-GAAP information for the three months and the year ended December 31, 2013 has been updated to exclude amortization of intangible assets to conform to our current period presentation. See the table below titled “Reconciliation of Non-GAAP Results to Nearest GAAP Measures.”

     Full Year 2014 Business Highlights

    • Revenue for the full year 2014 was $12.47 billion, an increase of 58% year-over-year.
    • Income from operations for the full year 2014 was $4.99 billion.
    • Net income for the full year 2014 was $2.94 billion.
    • Free cash flow for the full year 2014 was $3.63 billion.
    • Daily active users (DAUs) were 890 million on average for December 2014, an increase of 18% year-over-year.
    • Mobile DAUs were 745 million on average for December 2014, an increase of 34% year-over-year.
    • Monthly active users (MAUs) were 1.39 billion as of December 31, 2014, an increase of 13% year-over-year.
    • Mobile MAUs were 1.19 billion as of December 31, 2014, an increase of 26% year-over-year.

    Fourth Quarter 2014 Financial Highlights

    Revenue – Revenue for the fourth quarter of 2014 totaled $3.85 billion, an increase of 49%, compared with $2.59 billion in the fourth quarter of 2013. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by 53%.

    • Revenue from advertising was $3.59 billion, a 53% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, revenue from advertising would have increased by 58%.
    • Mobile advertising revenue represented approximately 69% of advertising revenue for the fourth quarter of 2014, up from approximately 53% of advertising revenue in the fourth quarter of 2013.
    • Payments and other fees revenue was $257 million, a 7% increase from the same quarter last year.

    Costs and expenses – GAAP costs and expenses for the fourth quarter of 2014 were $2.72 billion, an increase of 87% from the fourth quarter of 2013. Non-GAAP information for 2013 has been updated to exclude amortization of intangible assets to conform to our current period presentation. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, non-GAAP costs and expenses were $1.63 billion in the fourth quarter of 2014, up 50% compared to $1.09 billion for the fourth quarter of 2013.

    Income from operations – GAAP income from operations for the fourth quarter of each of 2014 and 2013 was $1.13 billion. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, non-GAAP income from operations for the fourth quarter of 2014 was $2.22 billion, up 48% compared to $1.50 billion for the fourth quarter of 2013.

    Operating margin – GAAP operating margin was 29% for the fourth quarter of 2014, compared to 44% in the fourth quarter of 2013. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, non-GAAP operating margin was 58% for the fourth quarter of each of 2014 and 2013.

    Provision for income taxes – GAAP income tax expense for the fourth quarter of 2014 was $413 million, representing a 37% effective tax rate. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, the non-GAAP effective tax rate would have been approximately 31%.

    Net income and EPS – GAAP net income for the fourth quarter of 2014 was $701 million, up 34% compared to $523 million for the fourth quarter of 2013. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, and income tax adjustments, non-GAAP net income for the fourth quarter of 2014 was $1.52 billion, up 86% compared to $814 million for the fourth quarter of 2013. GAAP diluted EPS was $0.25 in the fourth quarter of 2014, up 25% compared to $0.20 in the fourth quarter of 2013. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, and income tax adjustments, non-GAAP diluted EPS for the fourth quarter of 2014 was $0.54, up 69% compared to $0.32 in the fourth quarter of 2013.

    Capital expenditures – Capital expenditures for the fourth quarter of 2014 were $517 million.

    Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $11.20 billion at the end of the fourth quarter of 2014.

    Free cash flow – Free cash flow for the fourth quarter of 2014 was $1.07 billion.

    Webcast and Conference Call Information

    Facebook will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast of Facebook’s earnings release call can be accessed at investor.fb.com, along with the earnings press release, financial tables and slide presentation. Facebook uses the investor.fb.com website and Mark Zuckerberg’s Facebook Page (https://www.facebook.com/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

    Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (404) 537-3406 or +1 (855) 859-2056, conference ID 53903003.

    About Facebook

    Founded in 2004, Facebook’s mission is to give people the power to share and make the world more open and connected. People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.

    Contacts

    Investors:
    Deborah Crawford
    [email protected] / investor.fb.com

    Press:
    Vanessa Chan
    [email protected] / newsroom.fb.com

    Forward Looking Statements

    This press release contains forward-looking statements regarding our future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our ability to continue to monetize our mobile products; risks associated with new product development and their introduction as well as other new business initiatives; our emphasis on user growth and engagement and the user experience over short-term financial results; competition; litigation; privacy and regulatory concerns; risks associated with acquisitions; security breaches; and our ability to manage growth and geographically-dispersed operations. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption “Risk Factors” in our Quarterly Report on Form 10-Q filed with the SEC on October 30, 2014, which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2014. In addition, please note that the date of this press release is January 28, 2015, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

    Non-GAAP Financial Measures

    To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: revenue excluding foreign exchange effect and advertising revenue excluding foreign exchange effect; non-GAAP costs and expenses; non-GAAP income from operations; non-GAAP net income; non-GAAP diluted shares; non-GAAP diluted earnings per share; non-GAAP operating margin; non-GAAP effective tax rate; and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of items, specifically amortization of intangible assets, share-based compensation expense, and payroll tax related to share-based compensation expense, and the related income tax effects of the aforementioned exclusions, that are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.

    We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

    We exclude the following items from one or more of our non-GAAP financial measures:

    Amortization of intangible assets. We amortize intangible assets acquired in connection with acquisitions. We exclude these amortization expenses because we do not believe these expenses are reflective of ongoing operating results in the period. These amounts arise from our prior acquisitions and have no direct correlation to the operation of our business.

    Share-based compensation expense. We exclude share-based compensation expense because we believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC 718, we believe that providing non-GAAP financial measures that exclude this expense allows investors to make more meaningful comparisons between our operating results and those of other companies. Accordingly, we believe that excluding this expense provides investors and management with greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry.

    Payroll tax expense related to share-based compensation. We exclude payroll tax expense related to share-based compensation expense because, without excluding these tax expenses, investors would not see the full effect that excluding share-based compensation expense had on our operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise, which factors may vary from period to period independent of the operating performance of our business. Similar to share-based compensation expense, we believe that excluding this payroll tax expense provides investors and management with greater visibility to the underlying performance of our business operations and facilitates comparison with other periods as well as the results of other companies.

    Income tax effect of amortization of intangible assets, share-based compensation and related payroll tax expenses. We believe excluding the income tax effect of non-GAAP adjustments assists investors and management in understanding the tax provision related to those adjustments and provides useful supplemental information regarding the underlying performance of our business operations.

    Foreign exchange effect on revenue. We translate revenue for the three months and year ended December 31, 2014 using prior year exchange rates for our settlement currencies, which we believe is a useful metric that facilitates comparison to our historical performance.

    Purchases of property and equipment; Property and equipment acquired under capital leases. We subtract both purchases of property and equipment and property and equipment acquired under capital leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we finance such property or equipment with a capital lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business.

    For more information on our non-GAAP financial measures and a reconciliation of such measures to the nearest GAAP measure, please see the “Reconciliation of Non-GAAP Results to Nearest GAAP Measures” table in this press release.

    FACEBOOK, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (In millions, except for per share amounts)
    (Unaudited)
    Three Months EndedDecember 31, Year Ended December 31,
    2014 2013 2014 2013
    Revenue $ 3,851 $ 2,585 $ 12,466 $ 7,872
    Costs and expenses:
    Cost of revenue 653 491 2,153 1,875
    Research and development 1,111 408 2,666 1,415
    Marketing and sales 624 292 1,680 997
    General and administrative 330 261 973 781
        Total costs and expenses 2,718 1,452 7,472 5,068
    Income from operations 1,133 1,133 4,994 2,804
    Interest and other income/(expense), net (19) (3) (84) (50)
    Income before provision for income taxes 1,114 1,130 4,910 2,754
    Provision for income taxes 413 607 1,970 1,254
    Net income $ 701 $ 523 $ 2,940 $ 1,500
    Less: Net income attributable to participating securities 5 3 15 9
    Net income attributable to Class A and Class B common stockholders $ 696 $ 520 $ 2,925 $ 1,491
    Earnings per share attributable to Class A and Class B common stockholders:
    Basic $ 0.25 $ 0.21 $ 1.12 $ 0.62
    Diluted $ 0.25 $ 0.20 $ 1.10 $ 0.60
    Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
    Basic 2,761 2,458 2,614 2,420
    Diluted 2,816 2,558 2,664 2,517
    Share-based compensation expense included in costs and expenses:
    Cost of revenue $ 18 $ 11 $ 62 $ 42
    Research and development 685 172 1,328 604
    Marketing and sales 103 42 249 133
    General and administrative 90 48 198 127
        Total share-based compensation expense $ 896 $ 273 $ 1,837 $ 906
    Payroll tax expenses related to share-based compensation included in costs and expenses:
    Cost of revenue $ — $ — $ 3 $ 1
    Research and development 6 4 33 30
    Marketing and sales 2 1 9 8
    General and administrative 5 48 12 54
        Total payroll tax expenses related to share-based compensation $ 13 $ 53 $ 57 $ 93
    Amortization of intangible assets included in costs and expenses:
    Cost of revenue $ 42 $ 7 $ 87 $ 16
    Research and development 10 8 33 36
    Marketing and sales 102 1 105 4
    General and administrative 23 23 94 89
        Total amortization of intangible assets $ 177 $ 39 $ 319 $ 145
    FACEBOOK, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In millions)
    (Unaudited)
    December 31, 2014 December 31, 2013
    Assets
    Current assets:
    Cash and cash equivalents $ 4,315 $ 3,323
    Marketable securities 6,884 8,126
    Accounts receivable, net of allowances for doubtful accounts of $39 and $38 as of December 31, 2014 andDecember 31, 2013, respectively 1,678 1,109
    Prepaid expenses and other current assets 793 512
     

    Total current assets

    		 13,670 13,070
    Property and equipment, net 3,967 2,882
    Intangible assets, net 3,929 883
    Goodwill 17,981 839
    Other assets 637 221
    Total assets $ 40,184 $ 17,895
    Liabilities and stockholders’ equity
    Current liabilities:
    Accounts payable $ 176 $ 87
    Partners payable 202 181
    Accrued expenses and other current liabilities 866 555
    Deferred revenue and deposits 66 38
    Current portion of capital lease obligations 114 239
     

    Total current liabilities

    		 1,424 1,100
    Capital lease obligations, less current portion 119 237
    Other liabilities 2,545 1,088
     

    Total liabilities

    		 4,088 2,425
    Stockholders’ equity
    Common stock and additional paid-in capital 30,225 12,297
    Accumulated other comprehensive (loss) income (228) 14
    Retained earnings 6,099 3,159
     

    Total stockholders’ equity

    		 36,096 15,470
    Total liabilities and stockholders’ equity $ 40,184 $ 17,895
    FACEBOOK, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In millions)
    (Unaudited)
    Three Months EndedDecember 31, Year Ended December 31,
    2014 2013 2014 2013
    Cash flows from operating activities
    Net income $ 701 $ 523 $ 2,940 $ 1,500
    Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization 433 274 1,243 1,011
    Lease abandonment — 9 (31) 117
    Share-based compensation 845 273 1,786 906
    Deferred income taxes (180) (58) (210) (37)
    Tax benefit from share-based award activity 499 325 1,853 602
    Excess tax benefit from share-based award activity (504) (324) (1,869) (609)
    Other 2 17 7 56
    Changes in assets and liabilities:
    Accounts receivable (346) (233) (610) (378)
    Prepaid expenses and other current assets (78) (78) (123) 355
    Other assets (58) (107) (216) (142)
    Accounts payable 19 43 31 26
    Partners payable (6) 10 (28) 12
    Accrued expenses and other current liabilities 130 67 328 (38)
    Deferred revenue and deposits 7 2 10 8
    Other liabilities 119 488 346 833
    Net cash provided by operating activities 1,583 1,231 5,457 4,222
    Cash flows from investing activities
    Purchases of property and equipment (517) (483) (1,831) (1,362)
    Purchases of marketable securities (2,889) (3,069) (9,104) (7,433)
    Sales of marketable securities 1,047 555 8,438 2,988
    Maturities of marketable securities 199 609 1,909 3,563
    Acquisitions of businesses, net of cash acquired, and purchases of intangible assets (4,221) (131) (4,975) (368)
    Change in restricted cash and deposits (235) (15) (348) (11)
    Other investing activities, net — — (2) (1)
    Net cash used in investing activities (6,616) (2,534) (5,913) (2,624)
    Cash flows from financing activities
    Net proceeds from issuance of common stock — 1,478 — 1,478
    Taxes paid related to net share settlement (70) (183) (73) (889)
    Proceeds from exercise of stock options 11 6 18 26
    Repayment of long-term debt — — — (1,500)
    Principal payments on capital lease obligations (44) (100) (243) (391)
    Excess tax benefit from share-based award activity 504 324 1,869 609
    Net cash provided by (used in) financing activities 401 1,525 1,571 (667)
    Effect of exchange rate changes on cash and cash equivalents (52) 1 (123) 8
    Net (decrease) increase in cash and cash equivalents (4,684) 223 992 939
    Cash and cash equivalents at beginning of period 8,999 3,100 3,323 2,384
    Cash and cash equivalents at end of period $ 4,315 $ 3,323 $ 4,315 $ 3,323
    Supplemental cash flow data
    Cash paid during the period for:
    Interest $ 3 $ 5 $ 14 $ 38
    Income taxes $ 77 $ 21 $ 184 $ 82
    Cash received during the period for:
    Income taxes $ — $ 2 $ 6 $ 421
    Non-cash investing and financing activities:
    Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions $ 53 $ 22 $ 91 $ 53
    Property and equipment acquired under capital leases $ — $ — $ — $ 11
    Fair value of shares issued related to acquisitions of businesses $ 12,987 $ — $ 14,344 $ 77
    Reconciliation of Non-GAAP Results to Nearest GAAP Measures*
    (In millions, except percentages and per share amounts)
    (Unaudited)
    Three Months Ended December 31, Year Ended December 31,
    2014 2013 2014 2013
    GAAP revenue $ 3,851 $ 2,585 $ 12,466 $ 7,872
    Foreign exchange effect on 2014 revenue using 2013 rates (103) (61)
    Revenue excluding foreign exchange effect $ 3,954 $ 12,527
    GAAP revenue year-over-year change % 49% 58%
    Revenue excluding foreign exchange effect year-over-year change % 53% 59%
    GAAP advertising revenue $ 3,594 $ 2,344 $ 11,492 $ 6,986
    Foreign exchange effect on 2014 advertising revenue using 2013 rates (103) (61)
    Advertising revenue excluding foreign exchange effect $ 3,697 $ 11,553
    GAAP advertising revenue year-over-year change % 53% 65%
    Advertising revenue excluding foreign exchange effect year-over-year change % 58% 65%
    GAAP costs and expenses $ 2,718 $ 1,452 $ 7,472 $ 5,068
    Share-based compensation expense (896) (273) (1,837) (906)
    Payroll tax expenses related to share-based compensation (13) (53) (57) (93)
    Amortization of intangible assets (177) (39) (319) (145)
    Non-GAAP costs and expenses $ 1,632 $ 1,087 $ 5,259 $ 3,924
    GAAP income from operations $ 1,133 $ 1,133 $ 4,994 $ 2,804
    Share-based compensation expense 896 273 1,837 906
    Payroll tax expenses related to share-based compensation 13 53 57 93
    Amortization of intangible assets 177 39 319 145
    Non-GAAP income from operations $ 2,219 $ 1,498 $ 7,207 $ 3,948
    GAAP net income $ 701 $ 523 $ 2,940 $ 1,500
    Share-based compensation expense 896 273 1,837 906
    Payroll tax expenses related to share-based compensation 13 53 57 93
    Amortization of intangible assets 177 39 319 145
    Income tax adjustments (269) (74) (440) (310)
    Non-GAAP net income $ 1,518 $ 814 $ 4,713 $ 2,334
    GAAP and Non-GAAP diluted shares 2,816 2,558 2,664 2,517
    GAAP diluted earnings per share $ 0.25 $ 0.20 $ 1.10 $ 0.60
    Net income attributable to participating securities — — (0.01) —
    Non-GAAP adjustments to net income 0.29 0.12 0.68 0.33
    Non-GAAP diluted earnings per share $ 0.54 $ 0.32 $ 1.77 $ 0.93
    GAAP operating margin 29% 44% 40% 36%
    Share-based compensation expense 23% 11% 15% 12%
    Payroll tax expenses related to share-based compensation —% 2% —% 1%
    Amortization of intangible assets 5% 2% 3% 2%
    Non-GAAP operating margin 58% 58% 58% 50%
    GAAP income before provision for income taxes $ 1,114 $ 1,130 $ 4,910 $ 2,754
    GAAP provision for income taxes 413 607 1,970 1,254
    GAAP effective tax rate 37% 54% 40% 46%
    GAAP income before provision for income taxes $ 1,114 $ 1,130 $ 4,910 $ 2,754
    Share-based compensation and related payroll tax expenses 909 326 1,894 999
    Amortization of intangible assets 177 39 319 145
    Non-GAAP income before provision for income taxes $ 2,200 $ 1,495 $ 7,123 $ 3,898
    Non-GAAP provision for income taxes 682 681 2,410 1,564
    Non-GAAP effective tax rate 31% 46% 34% 40%
    Net cash provided by operating activities $ 1,583 $ 1,231 $ 5,457 $ 4,222
    Purchases of property and equipment (517) (483) (1,831) (1,362)
    Property and equipment acquired under capital leases — — — (11)
    Free cash flow $ 1,066 $ 748 $ 3,626 $ 2,849

     

     

    Image via Mark Zuckerberg, Facebook

  • Facebook Ads Get Conversion Lift Measurement

    Facebook announced a new way to measure conversion lift, giving advertisers a way to determine additional business results driven from people reached by Facebook ads on different devices. WIth conversion lift measurement, Facebook determines additional sales caused by seeing ads, as opposed to having to rely on counting clicks and conversions.

    This builds on the feature Facebook launched a little over a year ago enabling retailers using customer audiences to measure offline sales.

    “The industry is lagging behind; online really started with search and clicks – cut to now where display, social make up online, too, and yet measurement hasn’t caught up – marketers still often use clicks to measure all of their online media,” a spokesperson for Facebook tells WebProNews. “But, clicks don’t correlate to in-store sales. Datalogix studies have shown that 90% of people who saw a Facebook ad and purchased in-store never clicked on an ad at all. By using lift measurement, an advertiser can determine the incremental business/sales that the ad impressions caused and accordingly, can make sound marketing decisions based on these results.”

    “Starting now, Facebook advertisers around the world will be able to apply this measurement method to both online sales (using our conversion and Custom Audience pixels) and offline sales (using Custom Audiences and CRM data from advertisers),” the spokesperson adds. “The premise of a lift measurement is simple: when creating a Facebook campaign, a test group (people that see ads) and a control group (people that don’t) are established. When the campaign has ended, advertisers can determine what sales were driven by what ads and see the additional lift that occurred among the test group. This is a similar methodology that many other industries use – from medicine to direct mail marketing – to determine causation.”

    Facebook says it’s encouraging the broader advertising industry to adopt lift as the standard for measurement. The company says it believes this to be the best method for proving the effectiveness of ads regardless of whether or not they run on Faebook.

    The spokesperson says, “It addresses several of the measurement challenges currently facing marketers: over-reliance on the value of clicks, outdated technology and Ineffective testing methods.”

    The company elaborates on these points in a blog post, and shares results from a conversion lift study from Open Colleges.

    Image via Facebook

  • DoubleClick Adds More Viewability Features

    Earlier this month at the Consumer Electronics Show in Las Vegas, Google made a couple of big advertiser-related announcements. For one, they’ve added over 30 broadcasters, premium publishers, and major brands to Google Partner Select, the premium video service they launched last year. Second, they would roll out viewability reporting across their ad platforms.

    Now, they’re building on the viewability efforts by adding viewability targeting in DoubleClick Bid Manager and Viewability data in DoubleClick Ad Exchange bid requests.

    DoubleClick Bid Manager clients can measure and target impressions based on historical viewability of an impression. They can improve campaign performance in real time by eliminating the need to manually reallocate spend to find viewable impressions, Google says.

    Ad Exchange clients can see historical viewability percentage for each impression when available Programmatic buyers can use this information to influence their decisions before placing bids.

    “Viewability reporting has given marketers the data to understand how many of their ads were seen,” says Google. “Now they can use that same data to programmatically increase the viewability of their campaigns. For brands like TalkTalk Telecom Group, using viewability targeting on DoubleClick Bid Manager has driven strong results.”

    “TalkTalk Telecom Group, a leading TV, broadband, mobile, and phone provider in the U.K., was eager to boost the viewability of its ads while maintaining costs,” the company adds. “Having already implemented programmatic buying to reach potential customers at the exact moment they’re ready to commit, TalkTalk wanted to then ensure its ads were actually being seen by targeting viewable impressions. To do so, the company deployed DoubleClick Bid Manager with Active View. TalkTalk generated 94% more viewable impressions, increased CTR 133%, and lowered CPC by 40%.”

    According to Google, half of ads measured are not viewed.

    Image via Google