Facebook cut the line on its first-ever earnings call not too long ago and, as predicted, Mark Zuckerberg was on the line, as were COO Sheryl Sandberg and CFO David Ebersman. Also as predicted, Zuck sounded like Kermit the Frog, albeit a tense Kermie, like if Miss Piggy is asking him difficult questions about monetization and mobile. “Just tried Shazam to ID Zuck’s up/down/up voice. No joy there either,” investor Paul Kedrosky quipped on Twitter.
Meanwhile, when Zuck passed the phone to Ms. Sandberg for her prepared remarks, she sounded closer to the Singularity than we thought. Wired‘s Ryan Tate compared it to an “echo-voiced cyborg.”
Here’s what we learned:
In response to questions about Instagram, Mark Zuckerberg temporarily freaked out the Twitterati when he said, “Our strategy has primarily been to buy companies for talent,” leaving some to wonder about the end of photo-sharing service, which Twitter is already trying to handicap. (Hurry, find all your Twitter friends on Instagram while there’s still hope!) However, Zuck actually said Instagram was an aberration from Facebook’s typical acqui-hire strategy, which they will continue to stick to going forward, i.e. the end of billion dollar deals.
The real surprise? That it’s not over yet. “The acquisition hasn’t closed,” said Mr. Zuckerberg, “So there’s been no integration or anything like that,” adding that we can expect an update when that happens. That’s particularly interesting considering Instagram is already building out its web presence with online profiles. If that’s what happens before it’s fully merged, what will Instagram look like after Zuck gets his hands on it?
PHONING IT IN
“Facebook is the most used app on basically every mobile platform. So when we think about what we want to do right now, we want to increase the depth of experience in addition to just growing users. We want to not just have applications that people use, but also be deeply integrated into these systems as much as possible, and develop an ecosystem where other apps can be built on top of Facebook.”
As Jenna Wortham from The New York Times pointed out, “Zuck says that Facebook is the *most* used app on every mobile platform. So what does it mean if they can’t figure out how to monetize it?” Others joked that it was the most used “because it’s the slowest.”
Regardless of what the unhappy mobile users might think, he said the plan was to work closely with existing systems like Apple’s iOS, “as opposed to building out a whole [Facebook] phone which wouldn’t really make sense for us here.”
MORE MOBILE, MORE PROBLEMS
Mobile was the big question on everyone’s mind, and the call offered a lot of numbers that showed the size of the market, but again, fewer answers when it came to how to monetize. Mr. Zuckerberg pointed out that 4 to 5 billion people are expected to have smartphones, exceeding the number of PC users. Somewhere around here is where we swear we heard him stutter and gulp. At the end of June, Facebook reported 540 million mobile users, a 67 percent jump from the 325 million using it last year. And people who log on via their phone tend to be 20 percent more likely to access Facebook on any given day.
But despite the upswing in mobile usage, only half of the ad spend for its Sponsored Stories, social ads that try to use your friends faces to sell shit, is spent on mobile. Facebook is, however, selling $1 million of those a day. Mr. Ebersman noted that CPMs grew by more than 20 percent because of this kind of ad format, nonetheless, Facebook delivered fewer ads overall because of the shift to mobile.
NEWSFEED COULD GET WORSE
Throughout the call, all three representatives repeatedly emphasized the caution with which Facebook is introducing ads into your Newsfeed. Mr. Zuckerberg said Facebook measures everything down the Newsfeed including, clicks, engagements, shares, pageviews, ad performance, and user sentiment. And integrating any new features or ad unit would be done judiciously. Hmm, then please explain that monstrosity to your left.
As a friend noted recently, it’s looking trashier and more like MySpace every month.
There was however one sweet note amidst the earnings angst. Sheryl Sandberg hijacked a few seconds in the Q&A portion, when asked about the patent settlement with Yahoo, to congratulate her friend Marissa Mayer on her new gig as CEO. Ms. Mayer quickly said thanks . . . on Twitter. Hey, at least it wasn’t Google+.