Facebook’s Q3 Call: MizUnderstood on Mobile?
Facebook turned in a third quarter that met worried investor expectations and also showed a nice start to its mobile monetization efforts.
Time to reconsider dumping on the social networking behemoth by Wall Street? Well, there is Zynga and the need for even more monetization success to turn Facebook back into the digital darling it once was (pre-IPO, that is!).
Now it’s time to see if the company’s management can start that ball rolling in a conference call with analysts:
2:02 pm: Oops. Some screw-up on the call logistics. A tip: We can hear you, Facebook execs, so stop discussing your screwed-up mute button and saying “Omigod.”
(It’s not like you are Google and released the earnings early, ya know!)
Now, the real call begins with the investor lady and then CEO and co-founder Mark Zuckerberg.
Almost the first words out of his mouth: Mobile and monetization.
Investors apparently misunderstand the situation. Mobile, which is killing desktop advertising, is an opportunity and not a problem, says Zuckerberg.
Mobile, mobile, mobile, mobile — it’s good news!
That’s why Facebook is releasing better apps and speeding up the experience to make those mobile users more engaged.
“I believe over the long term that we’re going to see more monetization from mobile than over the desktop,” says Zuckerberg, who sounds like he believes it (he has to, of course).
2:09 pm: He wants to “dispel this myth that Facebook can’t make money in mobile.” It can! $150 million this quarter! Hey, that’s no small potatoes! (Actually, it is small potatoes, but impressive still.)
Zuckerberg goes into the importance of social, before telling us we are once again misunderstanding the gaming situation.
Here’s his take: Zynga might be stinking these days, but other games are doing great.
Then onto Instagram — here is where I must disclose that I love that photo-sharing app like three people I dated in college combined — which is going great.
Then, talking quickly as if his life depended on it, it was on to the apps platform, then the new Gifts service and more.
2:14 pm: Now it is only COO Sheryl Sandberg, who uses a slow-jazz tone in talking about advertising.
Facebook met Wall Street expectations and Sandberg calmly explains how science and art (Internet people love this way of describing the ugly business of advertising) in marketing is working.
She outlines the focus on ad products first, including customizing audiences, Facebook’s ad exchange, offers and promoted posts.
Sandberg then talks about improving the return for advertising on Facebook for marketers — called ROI. She goes into a bunch of stories of success with hotels and cellphone companies and such.
Sam’s Chowder House loves Facebook, by the way.
Then, of course, Sandberg is onto mobile — which has been Facebook’s demon since it went public.
The mobile-will-not-kill-us-but-make-us-stronger meme continues.
Actually, it has killed the stock so far, but Facebook is not going to give up.
“We have become one of the largest mobile advertising platforms in only eight months,” says Sandberg. Take that!
2:23 pm: Sandberg turns the call over to CFO David Ebersman, who has gotten a lot of the flack for the IPO disaster.
Water under the bridge — he launches into Facebook deets about how big it is and how strong the network is.
Ebersman goes into the numbers, which are all in the press release — which is my cue to go get a donut.
2:29 pm: Donut run was a success and Ebersman still blabbing, but wrapping it up and it is time for questions.
The first question is about engagement on mobile, which is an interesting concept to think about, and how the mobile monetizaton is trending.
Ebersman notes that engagement is just fine and says that mobile is ramping as a percentage of revenue.
Next question: Mobile! Does it cannibilize other parts of the business? Kind of, says Sandberg, who notes it is part of strategy.
Next question: More mobile!
Yes, Facebook is baking them as fast as advertisers can gobble them up.
Next question: Guess what? Not mobile? Sorry. It’s a veiled query about ranking what is important in terms of monetization.
Thank goodness, someone asks about possible plans for an ad platform and also a possible search initiative.
Zuckerberg does not really say much, except there is some experimenting going on around ad platforms (fyi, it is coming). He ignores the question about a search product to compete with Google.
2:41 pm: Still more mobile questions, which Facebook execs are doing a good job of answering.
Essentially: We’re on it, people, so chillax!
Here comes one out of left field about whether click-through rates on small devices are by accident due to “fat-fingered clicks.”
Ah, the fat-fingered click crisis!
This is why I could not be a public company exec — I would start giggling at the term “fat-fingered click.”
Back to serious stuff, like mobile ads and the ad platform.
The next question is on the nature of the advertiser base and the geography of that group.
Brand. Direct. Local businesses. Developers. These are the legs that Facebook’s business stands on!
Sandberg says she really thinks local businesses in particular is one arena that is a big opportunity.
In terms of geography of advertiser, it skews more toward developed world, says Ebersman.
A big-picture question for Zuckerberg: Now that he is not desktop king, how does he like being a little app in a world of mobile giants such as Apple and Google?
Zuckerberg is not worried — he gets more users, more time spent and more monetization.
He don’t need no stinkin’ mobile operating system! Facebook will be just fine on the weensie new iPad! Or the weensie new Nexus 7 tablet!
A question about good experiences for users and the need to market to make money.
It’s not a trade-off, insists Sandberg. Well, it is sometimes, but she is stressing that good ads can be good for users.
A final question! It is on any good news of offline demand generation, whatever that is. It’s a question about if Facebook is grabbing business from others.
Sandberg does not answer exactly, but notes Facebook is rolling out lots of products to compete with all the other advertising options out there.
It’s kind of a flat end to a call.
But if you want one true takeaway, it’s this: Facebook hearts mobile.