Mark Zuckerberg says Libra could help boost Facebook’s ad revenue

Yogita Khatri

Facebook CEO Mark Zuckerberg was asked during an annual shareholder call on Wednesday how Libra, the stablecoin projected bootstrapped by the social media giant, could help it financially.

The question, posed by Brett Young, was: "I am very supportive of Libra, but I'd like to know how does this benefit Facebook financially? How is Libra going to make money for Facebook?"

In response, Zuckerberg spoke about the impact on e-commerce activity and its subsequent effect on advertising revenue. Zuckerberg said that Libra could essentially make advertising more effective for businesses on its platform, and in turn, boost revenue for Facebook, according to a published transcript.

As Zuckerberg explained, Facebook doesn't charge a set price for ads; rather, businesses submit their advertisements through an auction system, bidding based on the results they're trying to obtain.

Zuckerberg contended that having integrated payments via Libra or Facebook Pay makes it simpler to convert ad-clickers into paying customers "because they actually have a form of payment that works that's on file, then it basically becomes worth it more for the businesses to bid higher in the ads than what we see are higher prices for the ads overall."

The Facebook CEO also spoke broadly about the impact of Facebook in the context of improving international payment rails, and how this, too, would create value for Facebook.

"I think there are a lot of opportunities with Libra to make the process of commerce and payments helpful — a lot easier," said Zuckerberg. "And I think that, that's going to be great for people around the world. I think it will be helpful for the economy overall. And we will be able to participate in some amount to that value creation ourselves through higher prices in ads if businesses are succeeding using these tools."

The Libra project was first unveiled last June and has seen notable developments in recent weeks. Last month, the Libra Association announced a broad reimagining of its core model, which will feature a series of tokens backed by different government-issued currencies.

The Libra Association has also added several new members recently, including Singapore investment giant Temasek. And on Wednesday, Facebook's wallet subsidiary Calibra announced a rebranding, now operating as Novi.

Editor's Note: This report has been updated to reflect that Brett Young asked the question during the shareholder call.


© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.