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After the amendment to the Malaysian Income Tax Act 1967 came into effect on Jan 17, businesses have been required to pay the form of tax for services rendered by offshore companies. Source: Shutterstock

Facebook reports advertising revenue of over $8.81bn, exceeding forecasts

FACEBOOK and Google are raking it in when it comes to advertising revenue, especially in mobile. And if you consider the amount of time that users spend on these two platforms, these astronomical numbers will be easy to believe.

As reported by Bloomberg, Google takes the top spot in the market for mobile advertising and Facebook is in second place. The social network’s revenue in the fourth quarter of last year exceeded its forecast of $8.51 billion, leaping 51 percent to US$8.81 billion.

According to a company statement, Facebook’s monthly active users have grown 15 percent within a year’s time to 1.86 billion – 1.23 billion are daily active users and 1.74 billion are checking the social network via smartphone. As for mobile advertising, it made up 84 percent of Facebook’s total ad revenue within the quarter.

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According to Brian Wieser, an analyst with Pivotal Research Group, Facebook and Google “are the two foundational elements to all digital advertising,” he said. “They’re just so big in terms of how much time people spend on the platform, and no advertisers’ goals need go unmet if they’re using Facebook.”

That may be true for now, but Facebook may have to begin bending its own rules if it means feeding the advertisers’ hearty appetite. Bloomberg notes that Facebook’s revenue gains are projected to slow down in 2017 because it doesn’t plan on increasing ad percentages that show up in users’ News Feeds.

It’s also run into some service issues. For example, Facebook had apparently overstated some of the user engagement metrics that it had reported to advertisers. In this case, Facebook had to make revisions to its methodology as trust in the effectiveness of its ads had been somewhat diluted.

Besides ad opportunities on the Facebook platform itself, the social network has also been leveraging Instagram, its 600 million user photo-sharing app – where it has been selling marketing spots, such as ads in live video, and also adding e-commerce tools.

And it’s hard to fathom how much it will continue to grow. According to CFO David Wehner: “There’s effectively no change in the outlook. We continue to invest aggressively to grow out the business for the long term.”