Overall ad impressions in the U.S. declined 2% from last year
due to the shift from desktop PCs, where Facebook can show lots of
its "marketplace" ads, to mobile, which has much more limited real
But CEO Mark Zuckerberg and Chief Operating Officer Sheryl
Sandberg seemed intent on sending the message that social ads in
users' news feeds (currently the sole mobile ad product) are the
answer to the problem and not merely an early stab at solving it.
(They were first announced in late
February but were initially only available as part of expensive
"We believe that sponsored stories in the news feed have the
potential to be among the most relevant ad formats for marketers,"
said Ms. Sandberg, also noting that these ad units were the
"cornerstone" of Facebook's mobile monetization strategy.
She alluded to the difficulties of scaling mobile quickly,
however, adding, "As always, at Facebook, user experience is
Mr. Zuckerberg said that the sponsored stories in users' news
feeds currently had a daily run rate of $1 million, with roughly
half coming from mobile.
After an IPO beset by fumbles, Facebook was under the gun to
meet Wall Street analyst expectations for revenue during its first
earnings season as a public company, or risk a disaster like
Zynga experienced yesterday when
its stock tumbled almost 40%.
It nominally succeeded, posting $1.18 billion in revenue ahead
of the average Wall Street estimate of $1.15 billion, but investors
still don't appear to be fully satisfied. The stock has tumbled
almost 9% in after-hours trading, indicating continuing concerns
about Facebook's decelerating revenue growth and its ability to
Facebook grew its revenue 32% over the same period last year,
when it made $895 million. Year-over-year revenue growth during the
last quarter was 45%, compared to 88% from 2010 to 2011 and 154%
from 2009 to 2010, so growth is indeed declining precipitously,
though not as much as some analysts had predicted for this
However, advertising revenue grew just 28% to $992 million. The
balance for payments and fees (the majority of which come from
Zynga and other gaming companies) was $192 million, or roughly 16%
of the total, about the same as last quarter.
Meanwhile, Facebook grew daily active users 32% year over year
to 552 million this June, but Chief Financial Officer David
Ebersman said that users in Brazil, India and Japan were driving
that growth. There were 543 million monthly mobile active users as
of June 30, up 67% from last year.
Notwithstanding the decrease in U.S. ad volume, Mr. Ebersman
said that the volume of ads delivered worldwide had increased 18%,
driven largely by expansion into Asia, while the price per ad grew
9%. He also acknowledged the continued trend of ad impressions
growing more slowly than usage of the platform due to mobile
Analysts were listening for updates on Facebook's real-time ad
exchange, where DSPs and retargeting firms will use third-party data to target Facebook
users. Ms. Sandberg referenced "FBX" in passing, noting that it
was in "early alpha testing."
Mr. Zuckerberg also dispelled rumors that Facebook is at work on
a competitor to the iOS and Android operating systems. Building out
a Facebook phone "wouldn't make that much sense for us to do," he