Facebook’s own news feed this year has been dominated by its controversial IPO and the aftermath. But life goes on for CEO Mark Zuckerberg who has three main focuses for the firm for the rest of the year: mobile, platform and social ads.
Mobile of course is the big one to crack. “Mobile is a huge opportunity for Facebook,” admits Zuckerberg. “Our goal is to connect everyone in the world. Over the next 5 years, we expect 4 billion to 5 billion people to have smartphones. That's more than twice as many people that have computers today. So building great services for these devices is essential for us to help people connect. We also think that people are inherently social, and having a device with you wherever you are creates more opportunities for sharing and connecting.”
To date, he insists, progress has been good for Facebook in this area. “We're finding that people are quickly adopting our mobile services,” he states. “As of the end of June, 543 million people were actively using our mobile services every month, each month. That's 67% more people than the 325 million who were using our mobile services just a year ago.
“We've also found that people who use our mobile services are more active Facebook users than people who only use our desktop services. On average, mobile users are around 20% more likely to use Facebook on any given day. So mobile not only gives us the potential to connect more people with our services, but it also gives us the ability to provide more value and a more deeply engaging experience.”
It’s not just a case of quantity; it’s quality, he adds. “We don't just want to have the most widely used mobile apps; we want to build the best apps and we also want to build experiences that are as deeply integrated as possible into every device and mobile app that people use,” he explains, citing as proof the firm’s two releases of its Android app, the acquisition of Instagram and the efforts to integrate Facebook into Apple’s forthcoming release of iOS. ”We're investing very heavily in improving our mobile apps, primarily across iOS, Android and the mobile Web.”
There’s also a platform play with a social bent. “We believe one of the biggest opportunities we have is to create the identity and social layer that all new apps and websites can be built on top of,” says Zuckerberg. “We think almost every product is better when you can experience it with the people you care about. So over time, we expect almost all of these products should naturally become social.
“Since there's no way we could ever build all of these ourselves, we're focused on building a successful platform, which enables developers to build great social experiences into their own apps by integrating with and exchanging information with Facebook.,” he adds. “We've already seen how social dynamics can transform industries, like gaming, and we believe other industries, like music, are starting to follow as well. Our goal is to make it easy for developers to build these social apps.” There’s also an advertising angle to this developer push, he admits: “We found that our largest developers also tend to become our largest advertisers as they look to further boost the distribution they're getting from us.”
Getting social with the advertising
But it’s Facebook’s own social advertising initiatives that most interest the wider market. “The basic idea here is that the best type of advertising is a message from a friend,” explains Zuckerberg. “Facebook wants to offer advertisers the best tools to create ads that are social. We believe that the more our advertising include 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.”
To date though while Zuckerberg insists that most advertising on Facebook does deliver “a compelling ROI” , he does admit that this advertising does not fall under the heading of ‘social’. So there’s clearly work to be done here, evangelising the Facebook vision.
“We believe the experience can be better and more social,” says Zuckerberg. “For experience -- 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 in ads.
“One important aspect of social ads is that since they're based on social activity, they've been to our News Feed product on both mobile and desktop. This is important because mobile users already spend so much time reading their News Feed. So these social ads in News Feed give us a clear path to building a strong business on mobile.”
Facebook recently began to roll out Sponsored Stories in both its desktop and mobile News Feed. This is proving successful, says Zuckerberg with an end of June run rate of over $1 million per day in revenue, about half of which comes from mobile.
“This is an encouraging start in our effort to generate revenue from the mobile use of Facebook,” he says. “We know that social ads perform much better than nonsocial ads, so our job over the next few years is to increase the percentage of ads that are social and engaging.”
In the second part of this article, Facebook’s Chief Operating Officer Sheryl Sandberg expands on the firm’s strategy to dominate the advertising market.