Facebook Class A Earnings Call Nuggets: Monetization Initiatives and Geographies

Facebook  Class A (NASDAQ:FB) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Monetization Initiatives

Heather Bellini – Goldman Sachs: Mark, I was wondering, you shared with us the continued success of mobile Install Ads. I was wondering, if you could share with us the other monetization initiatives that you have that you are most excited about for 2013? Then my follow-up for David would be if you can share with us qualitatively how CPMs trended in the various regions on a year-over-year basis?

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Sheryl Sandberg – COO: So I will take the first question. In terms of ads priorities, they are what I mentioned, mobile, measurement and product innovation. We are particularly focused on improving the quality of our ads, because we think that is the best way to have a great experience for users on Facebook, as well as for marketers. I think if you look at the success of custom audiences, partner categories, FBX, what you see in that are products that all move us toward better targeting, more relevance, better experience for users and for our marketers, and we are going to continue to invest very heavily in making the ad experiences as high return as they can for everyone involved.

Mark Zuckerberg – Chairman and CEO: Yes. I will just – I mean, I will just emphasize the same point. I mean, the things that I’m most excited about are things that are driving quality. The two big levers for the business are, A, obviously a lot of people spend a lot of time using Facebook to stay connected with all the people around them, and that gives us an opportunity to advertise. But I actually think over the long term, the thing that’s going to drive the business the most is getting the ads to be very high quality, personalized, good content in there, and a lot of the things that we are doing are aligned with that. So App Install, a lot of that stuff is just good content that people are interested in. There is no great way to besides app stores today to discover a lot of apps on mobile devices. Similarly, I’ve talked about the new feed redesign that we are rolling out and the content in there is much more visual and we’ve always had this policy that the advertising content will display in exactly the same way that the consumer content displays and making it so that people can share much more visual content making naturally advertisement can now have the same kind of compelling creative as well, which I think will increase the quality of that and over time increase the effectiveness as well…

David Ebersman – CFO: So, Heather, in terms of your question about PPMs, ads revenue grew well across all the geographic regions that we report on. I mentioned the U.S. and Canada growth in PPMs. We saw a similar number, a little bit lower, but similar in Asia. For Europe and rest of the world the numbers were much lower; a little bit above zero in the case of Europe; a little bit below in the case of rest of world. The interesting question around this is what those numbers might have looked like if we hadn’t made changes in the option dynamics and such as the price floor, and obviously we can’t answer that question quantitatively because we don’t have the data. But we feel pretty strongly and pretty confident that prices would have increased substantially more in all of the regions, if we hadn’t made those changes.



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Ross Sandler – Deutsche Bank: Just two questions. Engagement, first, was up across most of the geographies. We assume that’s primarily driven by mobile, but can you talk about anything else that’s driving up engagement? And then just a follow-up on the geographies. So it looked the U.S. had kind of the normal seasonal downtick sequentially whereas international most of those regions held up though sequentially. So, can you just talk about the difference between sell-through rate in the U.S. in News Feed versus some of those international markets?

David Ebersman – CFO: Yes, so in terms of growth and engagement geographically, I think you can see from the numbers that growth was strong across all the areas of the world. We continue to add a lot of users in places like India and Brazil, and in engagement trends, I think we’re similarly strong throughout, and mobile is clearly a big part of that equation and been very helpful to us in terms of getting more users; more daily users and more engagement from those users. In terms of revenue by geography – I don’t know if there’s a lot to add to the numbers I’ve already said. Europe looked good in the first quarter after being a little bit softer towards the end of last year and we continue to grow well in Asia and the rest of world. So, I think, just pretty consistent performance there.

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