Facebook’s 1.8 billion users helped it generate more than $26 billion in 2016 revenue—with roughly 80% of it from mobile ads. But scale is only part of what’s driving that dazzling success: COO Sheryl Sandberg and her team have been relentlessly experimenting with how to make ads more compelling despite the limitations of small screens. “Creativity’s never been so important,” Sandberg says. “When TV ads [first appeared], people thought the creative was important. Then when you moved into online, what really mattered was the targeting. What we’re [now] seeing on the Facebook platform is that it’s both.”
Over the past year, Facebook rolled out several new mobile ad formats, including full-screen, 360-degree video, and interactive ads that let users swipe, tilt, and zoom through carousels of images. And to help advertisers experiment with and make sense of these products, in November Facebook debuted the Creative Hub, a platform for businesses and agencies to mock up, share, and test ads. With Facebook’s growing focus on video, it’s also encouraging marketers to adapt their materials specifically to the social network (rather than just repost ready-made TV spots). When Sony Pictures added subtitles to its movie trailers last spring and recut them into a more news feed–friendly square format, it found them five times more effective in raising awareness than standard reposted previews. “You can’t just take your ads that were on the last platform and then port them over to the new one,” Sandberg says.
Facebook is also enabling a more direct connection between online engagement and real-world commerce. Already some brands have used targeting to double the revenue yield from news-feed campaigns, such as when Celebrity Cruises showed users trip itineraries based on Facebook’s insights into where they were planning to visit. The next step is letting users complete the transaction without leaving the platform. In October, Facebook turned its Events calendar into a stand-alone app, allowing groups of friends to, say, buy concert tickets through the service, thanks to its relationships with Ticketmaster and Eventbrite. “We’re thinking about how to make Facebook more useful,” says Andrew Bosworth, VP of ads and business platform. “We’ve got 60 million businesses [with official pages] on the platform. We’ve got 1.8 billion people. All we need to do is connect them.”
The marriage of social recommendations with commerce is rapidly attracting advertisers: 4 million on Facebook, 500,000 on Instagram. As Sandberg says, “We want to help them move products off shelves and drive cars off lots.”
This article is part of our coverage of the World’s Most Innovative Companies of 2017.