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Facebook Q4 2012 Concall: On Being A Mobile Company & Building New Ad Experiences

Facebook had reported total revenue of $1.585 billion for the quarter ending on December 30, 2012, up from $1.13 billion revenue in the same quarter last year and a net income of $64 million for the quarter, a decline from $302 million income in Q4-11. Here are some notes from Facebook’s Investor conference call:

Facebook Strategy: Facebook CEO Mark Zuckerberg said their strategy currently includes three parts – building the best mobile product, building a platform and services that use social graph and build a strong monetization engine.

Mobile Initiatives: In December, Facebook released a completely rebuilt Facebook for Android. While this version didn’t introduce any significant new feature, it significantly improved the user experience by improving the speed and stability of the app. At launch, the company had claimed that the new version was twice as fast when looking at photos and timeline and featured noticeably quicker launch times.

Zuckerberg said that Facebook has now transformed into a mobile company since the mobile platform allows them to reach out to more people, generate more engagement from these people and generate more revenues for each minute people spend on their mobile products. He also noted that the mobile platform provides lot of opportunities for Facebook to create more sharing mechanism through its platform and enables them to offer many new experiences to users.

During the last year, Facebook primarily focused on improving their mobile development process and shipped new versions of their apps on a regular monthly cycle, thereby offering a good version of all the Facebook features that users know and might need on their mobile phone. For the next year, Facebook plans to focus on building new mobile first experiences, however Zuckerberg didn’t disclose any specific information on what these experiences might be.

Photos: New Year’s Day was the biggest day for Facebook, with more than 600 million photos uploaded on that specific day. However, it is not clear if this number includes user uploads on Instagram, which Facebook acquired last year.

Platform: During the quarter, Facebook launched a limited preview of Graph Search, a social graph-based structured search tool that allows users to find people, places, photos and other content shared on Facebook. Facebook also extended the mobile app install ads product to all developers in October. Zuckerberg mentioned that the product is performing really well, but didn’t share any specific information about it. Facebook COO Sheryl Sandberg however mentioned that these ads were used by more than 20% of the top 100 grossing iOS apps.

Monetization: Facebook started off the year with no ads on their mobile products and ended the year generating 23% of their ad revenues from the mobile platform. Facebook had reported an advertising revenue of $1.33 billion for the quarter, indicating that the company earned around $305.9 million revenue from mobile ads.

Facebook CFO David Ebersman mentioned that the ad impressions increased by 46% year-on-year (YoY) and the average price per ad declined by 4% YoY. He attributed this to the significant impression growth in developing markets such as Asia and Latin America, which have relatively lower pricing.

On News Feed Ads: Zuckerberg mentioned that as they stated rolling out ads in the news feed, they noticed that it barely affected the user’s engagement level on Facebook, due to which they started showing few barely optimized ads in the news feed every day. Going forward, Facebook plans to improve the targeting and relevance of these ads and design better ad products. The company also plans to create new ad experiences, by experimenting with various media types on the platform, once their news feed design evolves to show richer stories.

On Advertisers: Facebook is currently focusing on four key types of marketers – brand marketers, direct marketers, local businesses and developers.  During the quarter, Facebook launched a new way for brand marketers to buy guaranteed ad impressions on mobile platform. Walmart used this method to deliver 50 million mobile ads to their existing and potential customers over the Thanksgiving weekend. Sandberg also mentioned that 65% of their advertisers are now using ads in news feed which run on both desktop and mobile, up from 50% in Q3 2012.

– Around 42 million unique users have claimed an offer through Facebook Offers, since its launch in September end. Facebook Exchange served around 1 billion daily impressions and supports around 1,300 advertisers every day.

– Number of local business pages who advertise on Facebook has doubled since the beginning of 2012. Around 500,000 pages have used the promoted post feature. Around 30% of these pages are new advertisers to Facebook while more than 70% are repeat customers.

– Last week, Facebook launched a new conversion mechanism system, allowing advertisers to measure the return of investment of their Facebook ads by tracking relevant user actions.

Revenue from Payments: Facebook reported total revenue of $256 million from its payments product. Ebersman said that Facebook’s games ecosystem continues to offer diversification in the type of games available, with new games growing engagement and monetization in the quarter. However, this was partially offset by declining desktop usage in developed markets since all of their games payments revenue currently come from desktop computers.

With respect to non-game payment revenue, Facebook generated $5 million revenue from user promoted posts and its Gifts product. The company is however expecting little revenue from Gifts and Graph search right now and believes that these can be big opportunities for the company in the future.

On Hiring: Facebook plans to aggressively hire in 2013, particularly in the product development segment to invest in products like Graph Search and similar products which drive long term engagement and monetization.

Facebook Q4 Earnings Call | Transcript (pdf)

Related: Facebook Asia: ARPU $2.35, 298M Monthly Active Users In Q4-2012

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