Mike Isaac

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Sheryl Sandberg Says Facebook Totally Doesn’t Have a Teenager Problem

Perhaps you’ve heard: Facebook may — or may not — have a teen problem.

It’s been the talk of the town since Facebook’s last earnings call, when CFO David Ebersman admitted that in the past quarter, the company “did see a decrease in daily users, specifically among younger teens.”

And with twelve little words, the tech media world was sent into a tizzy. Couple that with the recent murmurings that Facebook desperately wants to buy Snapchat — a service popular with youngsters — and you’ve got all the trappings of a full-fledged Facebook teen flight crisis.

I caught up with Facebook COO Sheryl Sandberg shortly after her recent discussion with Salesforce CEO Marc Benioff. She was willing to shed a little more light on Facebook’s supposed “teen problem,” along with a few other particular areas of interest for the company — including the Snapchat chatter, mobile ads and the company’s commerce initiatives.

Here’s an edited transcript of my conversation with Sandberg from Thursday:

AllThingsD: There has been quite a bit of chatter over the past few weeks about teens and declining teen usage of Facebook. On Facebook’s last earnings call, we heard [Facebook CFO] David Ebersman note some dropoff among the younger teen demographic, but he didn’t really say much else. Can you elucidate?

Sheryl Sandberg: So I think the reaction to that comment has been blown out of proportion. As we said on the earnings call, overall U.S. teen usage of Facebook remains stable.

The vast majority of U.S. teens are on Facebook. And the majority of U.S. teens use Facebook almost every day.

I feel like I’ve lived this before. When I was first at Facebook just a few years in, adults were getting into Facebook in larger numbers and there were all those memes that popped up — “Oh my God, my mom’s on Facebook!” and that sort of thing. I’m pretty sure “Saturday Night Live” even did a skit on it.

One of the challenges we face right now is that we’re a decade old. That means that we’re not the newest. And often, particularly in our space, newer things are shinier and cooler.

And what Mark [Zuckerberg] has said and what we all believe is that we’re not trying to be the coolest. And we’re not trying to be the newest. We’re trying to be the most useful.

I think if you look at the way teenagers continue to use Facebook, we are useful to them.

That’s the perfect lead-in to my next question on something “new and shiny” — Snapchat. Are you going to acquire the company? Is its rising success a threat to Facebook?

So, what I would say on this is that we are the leader in a growing space. Social sharing, personal sharing, using your mobile device to share is exploding. We and other services are continuing to grow because of it.

That’s what matters. If you are the leader in a growing market, other products grow as well. I’d personally rather be in a growing market — where there are more products and more services — than in a shrinking market.

And I think that we’ve shown that, even as new services come up, we can continue to grow.

So your stance is “maybe you buy them, maybe you don’t — but it’s a good thing that everyone is doing well?”

Well, people are doing more sharing. If they were doing less sharing, we’d be fighting for a piece of a smaller market. There’s a lot of competition out there, but it’s amid a growing market. That means there’s room for us to grow and others to grow as well.

So let’s shift a bit. On Facebook’s last earnings call, we heard David [Ebersman] mention that Facebook’s ad load inside the News Feed wouldn’t increase significantly. That spooked the Street, as shares plunged in after-hours trading. Should investors be worried?

We feel really great about how our business is performing now, and about opportunities for future growth.

Remember that, not so long ago, we had zero ads in the News Feed. And as we’ve made the shift to being a mobile-first company focusing on mobile revenue, we’ve put ads into the News Feed carefully, watching user sentiment all along the way. We’re pleased not just with how it’s driving the bottom line and giving us a strong mobile ads business, but on the impact on how users are continuing to use Facebook.

What David was saying was that our focus going forward was not on increasing the number of ads in the News Feed, but in increasing the quality of those ads. That’s where we think there’s still room to grow.

Including experimenting with new mediums, and working with advertisers to make their ads better?

Yeah, and even just targeting. We have really sophisticated targeting tools that we didn’t have even a year ago — everything from custom audiences to partner categories to lookalike audiences. And while we’ve done a great job getting trials of those targeting tools, there’s a lot of room for more of our ads to use the better targeting tools, and therefore make the ads more relevant to users. So we’re very focused on using targeting to make those ads a better experience for users and have a higher ROI for advertisers.

In that vein, I’m really curious about a particular ad unit that you have only spoken a little bit about: Mobile app installation ads. Can you give me an idea of how those are performing?

We don’t break out revenue on specific ad products, so I can’t tell you that exact percentage. But what I can tell you is that it’s a growing business, and it’s a new and exciting space that we think really is at the very beginning of what’s possible.

We think our mobile app install ads represent one of the only ways that people can get their apps discovered. And the ROI for people developing those apps has been really high, which means we have very strong demand for the product.

Asa Mathat / AllThingsD.com

Last question. Tell me about the payments and commerce business, something I hear little about. Facebook Gifts, too, which was scaled back.

So on Gifts, we did some experimenting. And what we saw was that roughly 80 percent of the gifts bought were gift cards. So we just decided to focus on what was working.

When you think about e-commerce, we are not a sales platform. People don’t buy and sell on Facebook the way they do on Amazon and eBay.

But we’re a very large player in direct response advertising space. Businesses are using Facebook to promote things to people, and those people are going to their sites and walking in their store doors and buying things. We’re seeing significant increased spend among e-commerce companies.

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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus