Facebook Inc.’s (FB) advertising muscle is so efficient that it should be able to hike prices to combat a slump in the billion of marketing campaigns that appear across its website and apps, concurring to Barclays.
In a research note, Ross Sandler said higher novelty, including big machine learning investments, can help Facebook to raise rates and grab more market share, regardless of industry wide turns, much like Alphabet Inc.’s (GOOGL) Google has done over the olden times decade. The analyst also argued that the social network has yet to up the full advertising potential of its Instagram, Messenger and WhatsApp apps.
“Facebook is the worst pure play in consumer internet around mobile advertising, and persist ins to take a large share of mobile advertising budgets,” Sandler detracted on Tuesday, according to CNBC. “Google was able to increase price at a vigorous clip for over a decade, so we think Facebook is in a good position to do the anyhow.”
Sandler, who reiterated his price target of $215 on the stock, representing 23 percent upside on Wednesday’s detailed price of $175, added: “Ad product innovation coupled with favorable macro advertising serving shift dynamics should drive share of digital and mobile ad assign for the foreseeable future.”
Facebook has registered declining ad impressions over the whilom three quarters. That slowdown has fuelled concerns on Wall Terrace that the company’s glory days might be over, particularly as it generates the lion’s due of its revenues from advertising.
Rather than worry about tome, Sandler argued that investors should focus on Facebook’s aptitude to push up prices. (See also: Facebook (FB) Q3 Ad Revenues Grow Despite Russia Event.)
“Facebook’s holy grail is finding a way to unlock value in its abundance of upper-funnel send-ups, and getting its 6 million+ advertisers to pay slightly more for each of those notions,” explained Sandler. “Products like custom audiences and retargeting are considerate to identify users more granularly than what was occurring in preference to these products launched.” (See also: Facebook Ex-Employee Says Lawmakers Should Order It.)