Facebook Q1 Preview: Signs Point Toward Further Ad Revenue Recovery

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Yinchen Niu/VIP

Facebook is set to report its Q1 earnings on Wednesday (April 28) and will serve as another major indicator of how much the ad market has recovered in recent months. The Menlo Park-based social giant accounted for 25% of U.S. digital ad spend in 2020, comfortably retaining its spot as the second-biggest U.S. digital ad player, according to eMarketer. 

That becomes more impressive when you consider Facebook’s relatively weak pandemic-struck Q2 in 2020, when its year-over-year overall ad revenue growth stood at just 10%, a figure down from 29% in Q2 2019. Brands didn’t pause spending for long, and Facebook’s ad revenue in H2 ’20 was 27% higher than it was the same period one year prior. 

This momentum is expected to continue into Q1. Omnicom and Publicis, two of the biggest ad holding companies globally, just beat Q1 revenue expectations. Moreover, vaccine rollouts have likely encouraged certain travel brands to ramp up advertising. And stimulus checks have contributed to heightened e-commerce activity and brand advertising, according to analysts cited by CNBC.  

That helps explain why Evercore analysts predict Facebook’s Q1 ad revenue total will be up 35% year-over year, marking acceleration from 17% in Q1 2020. 

Looking ahead, navigating regulatory scrutiny will continue to be a big theme for Facebook, especially as the Biden Administration solidifies its antitrust task force. While there’s been much talk of breaking Facebook up somehow, nothing on that front is likely to materialize and significantly impact Facebook’s user or ad revenue growth rate in the near term.

This is part of a series of Variety Intelligence Platform’s Q1 2021 earnings previews for the biggest tech and media companies. For a complete list of the companies VIP has analyzed in advance of the Q1 earnings season, read our most recently published special report, “Q1 Preview: 2021 Financial Outlook for Key Media & Tech Companies.” 

Read the full special report