On Thursday, Facebook reported their first-ever quarterly earnings since they became a public company. The company was on target with predictions, with $1.18 billion of profit on 12 cents per share. However, the company still reported a loss, which came as no surprise for most people who have followed Facebook’s IPO woes. The company has had a shaky quarter, and not much is looking up for their next quarterly report either.
Facebook has plans on how to change this though. Advertising is one of the main ways Facebook creates revenue. According to the Los Angeles Times, “Revenue from advertising totaled $992 million, which represented 84% of total revenue and a 28% increase from the same quarter last year.” Facebook hopes to increase advertising by focusing more on social ads. Social advertisements use the connection aspect of social networks to promote products. Friend recommendations and social influence fuel this kind of advertising and Zuckerberg plans to use this method to Facebook’s advantage.
There is also a lot of potential with Sponsored Stories, which COO Sheryl Sandberg explained in detail. Sandberg said, “Sponsored stories and newsfeed are the cornerstone of our mobile monetization strategy.” This form of revenue is fairly new, so there is still plenty of potential on this spectrum of their platform.
Facebook also wants to make a bigger mobile presence for themselves as well. They have launched a Facebook Camera app for iPhone, an improved version of the mobile messenger app for iOS and Android, and updated the Facebook Android app (finally!). Zuckerberg also highlighted that 543 million people are using Facebook's mobile services, and that it is used more often than the desktop service. Perhaps a continued expansion of their mobile services can change the pace of Facebook in the market.
One last blunder has been with Zynga, the social game service that has brought us wonders like Farmville. Zynga brings in about 12% of Facebook’s revenue. However, the company’s stock has fallen nearly 40% and they are blaming some of their losses on Facebook’s platform changes. The future looks bleak for Zynga. However, one solution Facebook can try is to better incorporate Zynga into their new platform so that users go back to using Farmville, Cityville, or other “ville” games by the provider. This is by no means the end of social games, and Facebook may just need to find a new provider that will help bring them more revenue.
Facebook has notoriously been the center of attention since going public, even if the attention hasn’t been the most positive. Zuckerberg’s once growing empire has lost some of its luster since becoming public, but don’t underestimate Facebook. The tactical acquisitions and platform changes haven’t been in vain, yet. Skeptics may think that Facebook has reached its peak and is starting its inevitable fall, but Zuckerberg won’t let his empire fall that easily.