Facebook expects ad targeting headwinds, but analyst aren’t worried

Facebook founder and CEO Mark Zuckerberg meets Founder and Executive Chairman of Alibaba Group Jack Ma (not pictured), on the China Development Forum in Beijing, China, March 19, 2016. 

Shu Zhang | Reuters

Facebook warned on Wednesday that it expects modifications in its skill to focus on advertisements to sting later this yr and into 2020. But analysts do not appear too involved.

Facebook receives most of its income from promoting. Chief Financial Officer Dave Wehner stated on the firm’s earnings name Wednesday that he expects fixed forex income progress charges will decelerate sequentially going ahead, with a extra pronounced slowdown within the fourth quarter and into 2020. That’s partially due to “ad targeting related headwinds and uncertainties.”

Asked by analysts on the decision to elaborate, Wehner stated the corporate is referring to headwinds in three areas. The first is regulatory modifications like final yr’s GDPR, or “General Data Protection Regulation” within the European Union. The regulation was meant to present people energy to manage their information, together with the flexibility to demand that corporations disclose how their information is getting used or ask them to destroy it. After GDPR implementation, Wehner stated Europe noticed a renewed acceleration of progress within the second quarter versus the primary, but stated the area is rising extra slowly than in North America and APAC

Another issue a deal with privateness from working methods “and the impact that that can have on measurements and also on targeting,” Wehner stated. More stringent privateness guidelines for Apple or Google’s cellular working methods might show difficult in Facebook’s skill to trace or gather info from its customers.

Lastly, Facebook cited its personal product modifications “as we put privacy more front and center,” Wehner stated. Examples of those modifications embrace a software permitting customers to clear info that Facebook collects about them from third-party apps and web sites. Earlier this month, Facebook additionally introduced that customers now have the flexibility to see extra details about the companies importing lists of their info, and the advertisers utilizing these lists to focus on advertisements.

Analysts appear to principally be shrugging these warnings off.

Jefferies analysts stated in a notice Thursday that whereas these ad targeting headwinds might have a “slight impact” on the enterprise, administration “had the same cautionary language in Q1 and the constant currency revenue growth rate accelerated sequentially.” Wehner final quarter did say the corporate anticipates ad targeting associated headwinds can be extra pronounced within the second half of 2019.

MoffettNathanson stated in a notice that although Facebook warned about slower progress within the coming quarters on account of potential ad targeting headwinds, “the international results would argue against that.”

“There doesn’t seem to be a good explanation why these aggregate markets would quickly decelerate after just accelerating for the first time in over two years,” the notice says. “If there’s pause in…


Have a comment? Type it below!