Facebook’s Core App is Out of Ad Space. Now What?

On Wednesday, Facebook delivered impressive Q3 results—beating Wall Street estimates and announcing it brought in over $5.7 billion in mobile ad revenue alone. But, by the end of the call, all investors could think about was the phrase “ad load”.

And advertisers should be pondering it, too.

Ad load, quite simply, is the volume of ads that can shown in a session before the user experience is hindered. Facebook ad load has been one of three primary factors in growing revenue year-over-year, according to the social network’s CFO Dave Wehner. However, Wehner explained to investors on Wednesday that he expects ad load to provide a “much smaller contribution” to revenue moving forward.

Essentially, Facebook ad load on its core app has peaked. And without room to jam more ads into every user’s session so, at some point, will Facebook’s advertising revenue growth.

That is, unless it can find alternative means to spur increases in ad dollars.

New user signups—which totaled 80 million in Q3—will continue to help. Wehner also mentioned to investors that 2017 will be an “aggressive investment year”; and new properties, particularly established ones with ad distribution channels already built-in, will also be catalysts to future ad growth.

Then, of course, are Facebook’s current owned properties, like Instagram & Messenger. While the latter has yet to offer much in the realm of ad opportunities, Instagram’s advertising platform continues to blossom, just a little over a year after going live for all.

All of these are, unfortunately, unproven opportunities for true revenue growth at this point for Facebook—and, despite their potential, don’t carry the weight of the billions of users that the core app do, either. While this has already made investors nervous (FB stock is down about $7/share since Q3 results were announced), advertisers should keep an eye on the impact of Facebook hitting peak ad load as well, given this could easily impact ad rates as more brands flock to the social network over time.

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