Facebook Inc A FB
Q2 2012 Earnings Call Transcript

Transcript Call Date 07/26/2012

We are also working on improving the distribution of these apps getting exchanged for the content they help people share.

These are some complex problems that will take time to work out. But you should expect us to make steady progress towards building out this ecosystem.

Finally I'd like to discuss our social ads initiative. The basic idea here is that the best type of advertising is a message from a friend. Facebook wants to offer advertisers the best tools to create ads that are social. We believe that the more our advertising includes interesting content from people you care about, the more marketers will be able to create advertising that adds value to people's experience on Facebook. Advertisers on Facebook today is already delivering a compelling ROI even though most advertising on Facebook today isn’t social. We believe the experience can be better and more social.

For example if I like a restaurant then my friends might see that I like that place and that’s likely a more convincing ad than anything the restaurant would produce on its own. That’s an example of aligning social activity and ads. One important aspect of social ads is that since they are based on social activity, they have been to our News Feed products on both mobile and desktop. This isn’t important because mobile users already spend so much time reading their News Feed. So these social ads and News Feed give us a clear path to building a strong business on mobile. I mentioned earlier that we recently began to rollout our Sponsored Stories in both desktop and mobile News Feed. By the end of June, Sponsored Stories in News Feed was at a run rate of $1 million per day in revenue, and about half of that is coming from mobile. This is an encouraging start in our effort to generate revenue from the mobile use of Facebook. We know that social ads perform much better than non-social ads, so our job over the next three years is to increase the percentage of ads that are social and engaging.

Overall, I hope my commentary gave you a good sense of our priorities around mobile platforms and social ads. We have a lot of interesting things going on there. There are a lot of challenges, and these are the types of problems that we like to work on. We're working hard to staff up across the company, especially in the technical groups to make sure that we make progress against these goals. We just announced that we've begun recruiting engineers to work in our London office to help us access talent across Europe. We're pleased that the company and culture are centered on building great product and around our mission to make the world more open and connected.

Thanks again for taking the time to be on the call with us today, and now I'd like to hand it over to Sheryl.

Sheryl Sandberg - COO: Thanks, Mark. I'm going to address today on Facebook's opportunities in the advertising market and the progress we have made in the past quarter. Of our total second quarter revenue of $1.18 billion, $992 million came from advertising. This represents a 32% year-over-year increase overall and a 28% increase for advertising.

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