Standard Media Index, a media adspend measurement company that claims to capture 60% of ad agency spending, claims that Facebook's ad revenues fell 25% in Q2 2013.
We are skeptical.
Facebook is scheduled to disclose its Q2 earnings on Wednesday, July 24. An average of analysts' estimates calls for revenue of $1.62 billion, or 16.7% increase. (The vast majority — 83% — of Facebook's revenues come from advertising.)
Facebook has generally had robust revenue growth every quarter, often piling on as much as $200 million in adspend every three months. So a 25% decline would be a sudden, dramatic catastrophic result.
SMI's report says:
Despite Q2 2013 ad revenues falling for Yahoo (-6%) and Facebook (-25%), the remaining top 20 vendors all posted double–digit growth figures, most notably Twitter (112%) Amazon.com (165%) and ad network, Rocket Fuel (116%).
Here's their chart:
We asked SMI to clarify how it came to the conclusion that here would be a large pullback in Facebook ad revenue, the company sent us this statement:
To note, Standard Media Index provides a timely, detailed, complete, and accurate view of media performance across all media types and markets. We capture more than 60 percent of total agency spend across multiple dimensions including upfront and scatter markets, representing the actual transaction data from the ad bookings of major media buying groups, including Vivaki, Aegis Media, Havas and IPG Mediabrands.
So the qualifier here is that the 25% decline comes only from ad agency spend. Facebook has 1 million active advertisers, mosty small and medium-sized businesses who handle their own ad spending directly via Facebook. They do not use agencies, and thus their data is not captured in SMI's numbers.
But agencies probably deliver Facebook's biggest clients, and account for a huge chunk of its spend. SMI says its data comes directly from the automated collection and aggregation of agencies' booking data.
Disclosure: The author owns Facebook stock.
