Mark Zuckerberg feels misunderstood. At least when it comes to how Facebook will flourish in the era of mobile computing.
Facebook's co-founder and CEO, speaking today on the company's third-quarter conference call with Wall Street analysts, stressed that investors just don't get what mobile can and will mean for Facebook's business -- in every way imaginable.
Mobile users spend more time on Facebook than people do when they access the social network on desktop computers. What's more, he said, they come back more frequently. In fact, Zuckerberg continued, some 70 percent of mobile users return to Facebook on a daily basis compared with just 20 percent of desktop users. Add to that the sheer potential reach as smartphone ownership swells across the world, and the potential is huge.
"Our opportunity on mobile is the most misunderstood opportunity for Facebook today," said Zuckerberg, speaking on Facebook's second conference call since the company's messy IPO in May. Facebook's mission, he said, is to make the world more open and connected, and with mobile, "we should be able to reach more people."
Most importantly, at least to today's spreadsheet-loving audience, is that mobile will "monetize far better over time" than Facebook on desktop. "We're actually much better positioned on mobile than we were on desktop," he said.
That was the subtext as Facebook's brass discussed the company's earnings results, which modestly beat Wall Street estimates. Maybe it was the mobile spiel but the stock jumped almost 13 percent in after-hours trading to more than $22 as the conference call went on. While that's still a far cry from the $38 a share it went public at, the attitude toward Zuckerberg has changed. Wall Street analysts no longer seem worried that he isn't working hard to make Facebook's a bigger and more profitable business. After all, the company has been aggressively launching products aimed squarely at boosting Facebook's bottom line.
And unlike the last conference call, this time around Zuckerberg and his two top lieutenants, COO Sheryl Sandberg and CFO David Ebersman, weren't defensive, particularly about how badly the stock has been performing. Instead, there were even kudos about how hard the Facebook crew is working at the business.
Facebook's efforts to make money from mobile are still young -- it only started trying to make money from mobile in March -- but with with today's earnings report the company began breaking out mobile revenue, which is certain to please the Street.
The company said that 14 percent of its total ad revenue -- roughly $150 million -- came from mobile advertising. That's small, for sure, especially considering that Facebook reported total revenue of $1.26 billion, but it's a really strong start and Facebook execs say they are still in the early days of tapping mobile ads.
"We're just getting started on this," said Zuckerberg.
The company had 1.01 billion monthly users -- roughly one-seventh the entire world population -- as the end of September, and 604 million of those were accessing Facebook via their smartphones. That represents a 61 percent increase from the comparable quarter a year ago, when Facebook was still a private company.
Facebook's key mobile ad products is Sponsored Stories, which are ads that appear in News Feeds the way a post from a friend might. On the call, Sandberg confirmed what any heavy mobile Facebook user can tell, which is that Facebook is serving up more and more Sponsored Stories in pursuit of money.
"We've definitely put a lot more ads...and you'll see us increasingly put ads in feeds," she said. So far, she said, users aren't complaining, but she said the company is constantly monitoring whether the ads are annoying users, mostly by examining engagement. "We have a long way to go in making those ads better, higher value," she said.
Already, Sandberg said, ads built into the News Feeds are "eight times more engaging" as those on the right hand side of Facebook's Web site. On the company's earnings call in July, Facebook said that Sponsored Stories were generating about $1 million a day in revenue. Now, that number has jumped to $4 million a day, with three-quarters of that for mobile ads.
The execs also talked up the recent roll out of its app ads for third-party developers, although they didn't offer up any numbers. In August, Facebook began letting some developers buy ads in mobile News Feeds as a way to drive more people to their apps. Last week, which was already into the fourth quarter, it opened that up to all developers.
One analyst asked about whether Facebook was on a dangerous path by relying so much on other company's platform's, namely Apple iOS and Google's Android. Zuckerberg, however, dismissed such concerns, saying that Facebook doesn't directly compete with iOS or Android as a platform for apps. Instead, he pointed to the growth of those platforms helping to fuel Facebook usage. "It puts us in a really strong position," he said.