The digital platforms Facebook and Google are transforming advertising because they have surmounted that perennial marketing problem whereby much of the money spent on marketing failed to reach likely prospects. The numbers surrounding Facebook’s advertising reach are huge. The platform has 2.4 billion users, about two-thirds of who log in every day.  And Facebook can micro-target practically all of them.

A company growing revenue in recent years at a 50% annual pace still has vast sources of advertising revenue to tap.  About 80 million businesses, for instance, have Facebook pages, but only six million of them advertise on Facebook. That’s bound to increase and helps explain why Magellan expects Facebook to double its 10% share of the global advertising market outside of China over the coming decade.

Despite this incredible growth profile, especially when you consider that Facebook is yet to monetise Messenger and WhatsApp, Facebook shares trade at around 20-times earnings – only a modest premium to the S&P 500’s PE ratio of about 17 times.

Magellan’s Domenico Giuliano recently presented to the Future Generation Investment Forum on Facebook. As well as highlighting Facebook’s potential, Domenico talks about some of the risks that Facebook faces.