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Facebook executives interpret earnings: video consumption is the biggest trend

via:博客园     time:2017/7/27 18:31:35     readed:717

The world's largest social network Facebook today released the second quarter of 2017 earnings, followed by an analyst conference call, the company's chief executive Mark - Zuckerberg (Mark Zuckerberg), chief operating officer Cheryl - Sandberg ( Sheryl Sandberg) and Chief Financial Officer David Wehner attended the conference call to introduce the company's second quarter business and financial situation and responded to questions from analysts.

The following is a summary of the conference call:

Morgan Stanley analyst Brian - Nowak (Brian Nowak): I told Mark a question, Facebook core applications in recent years to improve a lot, I would like to know how you pay attention to the core products on the consumer behavior Changed What changes do you think will happen to consumers in the next three to five years?

Zuckerberg: Facebook application of the main value is to help people share what they want to let people care about any content. From the text to the photos, from small groups to large groups, from the side of the friends to the world of everyone, you can share. This has always been Facebook's best thing. People focus on different things and have different experiences. But Facebook applications through a strong technical foundation to support all of these different use cases, Facebook applications have been supporting the use of all these cases.

The biggest trend in consumer behavior is video. Here is a strong technical support for it, if you go back five years ago, you try to watch the video on the phone, it may need to buffer about a minute to be able to watch, this experience is not good. If you want to upload a video, whether it is a long video or what you posted on the News Feed, or a 10 second short video you want to publish in other apps, it's not up to 30 seconds A good experience.

So now, with the development of network technology, we see that the current network has been able to meet the needs of users of a variety of content. This demand flows on social content, as we see in Stories and feed, flowing a lot of public content. Many pages are doing this work, David has just talked about the Facebook platform and some of the video behavior related to the trend.

Ralph Edward Schachart, an analyst at William Blair & amp; Co.: Mark, you've just talked about Messenger and WhatsApp are in the early stages of commercialization, and you've talked about what you want to do in Messenger The desire to act. I'm just curious about what factors make you want to act faster. How should we look at this from the perspective of consumers and monetization?

Zuckerberg: In Messenger, we offer two basic functions. First, we started to put some ads in the product, this is just to find out some basic parameters, such as how the effect of advertising, people are not like these ads, how they are for business services, we just try to understand it. So we started running these ads on a global scale. But as David said, although we have already begun to promote in many places, but the amount is still very small. We now need to do in the field of news applications, the most important strategic initiative is to allow people to interact with the enterprise, whether people or business, this is a very good interaction.

This is a way of thinking about this problem. If you are a business and you are interacting with customers in a news application, the investment rate of return is greater than the rate of return on investment that you interact with customers on your mobile network or try to get your customers to install an app and then interact with them through the app High, then the formation of a benign feedback loop, you will put ads to the Messenger platform. You will put more engineering and technical resources to create content and experience on the Messenger platform.

So we are now trying to make it the highest return on investment platform. I think we have made some progress. This is not to say that we can immediately open all the markets, but in general, I think we will certainly achieve this goal. We got some positive feedback from the market. But once we start to enter more and more vertical areas, I think this will release a lot of interactive behavior, many companies want to promote more interactive behavior, I think this is the basis for the establishment of a huge business.

Goldman Sachs analyst Heather Bellini: Xie Lier talked about some information about Instagram Stories, I would like to know if you can share with us the initial feedback of the advertisers. Do they think it's similar to advertising? Or are they going to use it in a different way to reach out to different people?

Sandberg: It's too early to put ads in Stories. I think people think so much: this is another way to use Facebook ad systems, including our ad targeting and ad detection services, to create creative ads that are appealing. Therefore, Facebook advertising positioning and optimization is completely immersive, this is an unparalleled opportunity. We also have great opportunities in Instagram. Obviously, the ads used on Instagram are much more than those used on Stories.

Our idea is that we are trying to help marketers effectively reach their customers, including both existing and new customers. We believe that this is a combination of all the products that represent our business strength, and they are also important factors driving us to continue to grow. In an interface, we work with a sales representative. Whether you are a big company or a small company, you can buy ads on Facebook. You can buy Instagram advertising slot, you can buy Audience Network ad slot, you can in the Facebook platform and Instagram to buy different forms of advertising. This means that you have multiple targeting opportunities, multiple opportunities, and even the opportunity to know who clicked on your ad and then investing to continue interacting with these customers. So we think that all these things are working together, these new forms of advertising and we established the ad system is very fit, this is the basis for all opportunities exist.

Securities analyst Peter C. Stabler: If you can, I would like to ask Cheryl to answer this question. Have you launched projects that meet the needs of specific advertising types such as dynamic travel advertising, and will you be able to launch more of these projects for specific types such as financial services and the automotive industry that have been infiltrated by Facebook, Instagram and Audience Network?

Sandberg: We are very happy with the growth rate in all vertical areas, and this trend continues, which makes us very happy. The strongest growth areas include e-commerce, CPG, entertainment, media, retail and games, which are very consistent. In most cases, when we develop products, we will apply them to all vertical areas, you will see that we really do so. So, no matter what your product catalog is, you can use it to upload your product catalog. When necessary, we also create specific advertising products tailored to a particular area, such as the dynamic travel advertisements you refer to as an example.

I think the most arduous job is to help different vertical marketers focus on the correct sales targets, because our industry for a long time has been concerned about the proxy indicators, such as someone watching the video duration, brand promotion, we Attention to the detection indicators, etc., but these indicators are proxy indicators. What really matters is that you see an ad and then buy a piece of merchandise. You see an ad, the number of times you drive a trip has increased. You see an ad, you booked a service.

As a result, different vertical areas have very different processes that can help them understand their own buying data so that we can associate advertising with their final buying behavior. We believe that this is one of the most important things we are very concerned about, and we still have a long way to go. What you see in different vertical areas is actually the result of our ability to help the marketer measure sales performance. The more we can combine ad traffic with sales, the more powerful our advertising program is for our customers, so we need to do a lot of work on ad detection for different vertical areas.

Douglas T. Anmuth, an analyst at JP Morgan Securities analyst: If you can, I would like to ask two questions. Mark, you have visited many parts of the country in the last few months, and I'm curious how did you apply what you learned during your visit to Facebook and the wider platform? Secondly, David, can you further explain what changes have occurred in operating expenses and capital expenditures?

Zuckerberg: Many of the themes about building communities and making people more closely linked have been confirmed in the experience gained during my trip. I've been trying to write them down. I did not write down my visit to Facebook every time. But when you talk to people in many different communities, I am surprised when it comes to the importance of local organizations and local communities' support for people.

In many different communities, there is a clear trend that the number of community members is declining. I think that this is a very important issue, which not only eroded the social structure of our country, but also affected the social structure of the world, I hope we can play a role in solving this problem. This is not something we can do directly, but I believe that we can make the people who want to build local communities more powerful, so that those who want to play a leading role in the local community to get the tools they need. I think that if we can do that, then you will be able to bring people together to form a local community. I think that when people feel the local community life becomes more comfortable when, this will help the people around the world more closely together.

Many of my visits, a lot of things, and many of the studies we've done on Facebook have emphasized this, all of which are reflected in our new quests.

Weiner: I do not think there is a fundamental change in operating expenses and capital spending. As visibility is better, we are controlling spending growth between 40% and 45%. We still firmly adhere to the current investment model. If you have to say something, then we are looking for new investment opportunities.

From the perspective of recruitment growth, I want to point out that since the beginning of the year, we have been speeding up the recruitment speed. We expect the second half of the recruitment speed will be accelerated. This quarter is Facebook since the creation of the largest number of quarterly recruitment.

We will continue to invest in key areas to recruit more engineers to advance priorities in the three, five and ten years of planning. We will invest in content to create a platform for content creators to enable them to find the audience and profit. We will continue to invest in community operations and other areas, so from the perspective of total expenditure, we will firmly adhere to the current investment model.

In terms of capital spending, we still expect this year's capital expenditure to be between $ 7 billion and $ 7.5 billion, and we are actively investing in our data centers to support global growth. So I think we are investing in all directions.

In terms of the number of employees, I would like to point out that our wage growth rate is often lagging behind the growth rate of the number of employees, because the number of employees is a final value, so we see the number of employees in 2017 to accelerate the growth of the phenomenon will Appeared in 2018.

Barclays Capital analyst Ross Sandler (Ross Sandler): I mention two questions about the application of the message. Two years ago, at the F8 conference, you talked about the total number of whatsApp users, more than 10 billion people, sending more than 50 billion messages a day, and the total number of Messenger users was about 1 billion people, sending 20 billion messages a day, so whatsApp's participation was probably Messenger 2.5 times. Is this accurate? What about the situation now? These two news applications are starting from a different location, which will Messenger and WhatsApp monetization of what kind of impact?

Weiner: I do not think we will share detailed statistics on the participation of the news platform. They are obviously important platform. The two platforms have more than 1.2 million active users. WhatsApp has a daily active user of 1 billion people, which has shown its participation. So, I think this shows the participation of this platform. In different regions, there are many more powerful news platform. For this reason, this has changed our priorities in different ways.

But in general, from the focus of monetization, I think the strategy in this area is very clear. We are focused on expanding the user base, which is the most important; secondly, its purpose is to establish an organic link between the business and the consumer; and third, it relates to how we build a monetization mechanism around these relationships. I think, compared with WhatsApp, we have a lot in common with Messenger. So, I think you will see us in the global launch of the ad with the test version of Messenger. We will learn from it and then apply the benefits to other areas.

Bank of America Merrill Lynch analyst Justin - Justin Post: I know video is Facebook's top priority. First of all, when you add video on Facebook, will there be any changes in user trends or engagement? Secondly, how do you see Facebook's semi-professional or professional video? Taking into account all the content sharing costs and production costs, when you compare it with the existing social business, this will be a good business? Will it have a negative impact on Facebook usage or a positive gain?

Weiner: I'll talk a little bit, then Mark add. As I said before, people began to spend more time on the video, which will inevitably affect their time spent on the News Feed. As a result, this will have an impact on the growth of advertising impressions. So in a sense, there will be mutual killing effect.

But what Mark is saying is that with the improvement of the network and the improvement of equipment, our products are also improved, the video is what we can provide, the most attractive experience. So we see that consumers are accepting video in this form, and we will develop more video products for them. As far as the content type is concerned, I think we are studying various forms of content. Of course, the core is the people to share the experience of life. This is the basis of the products we offer to make the world more closely linked. This is the community content. But semi-professional and professional content also have the opportunity. We are exploring the new content around this platform to ensure that professional content providers can come to our platform, find the audience, and then profit.

Zuckerberg: I ​​think you have made it very clear.

Robert W. Baird & Co. analyst Colin Alan: Does Facebook integrate with skill applications or platform features such as Alexa? Or something like Oculus, Messenger, or something like that would be part of another platform for Facebook? Also, give a more accurate timeline to reduce ad load growth.

Zuckerberg: I'll answer the first question. We will build what we consider useful. Some of which will become platforms, while others will become different components of the application and platform. But fundamentally, we are trying to serve our community, and we will do that on all these platforms.

Weiner: In terms of advertising load growth, I mentioned the fact that we still think that the ad load in the remainder of 2017 will be a less important factor. From the third quarter, I also mentioned a number of other factors, including some of the measures we took at the desktop to break or combat ad blocking technology. So this is a factor that affects desktop growth. Of course, I also talked about the video, we are concerned about is to promote and meet the consumer demand for video, which will lead to lower impression growth rate of advertising.

RBC capital market analyst Mark - Mahaney (Mark Mahaney): You mentioned Facebook may want to speed up the pace of monetization, I would like to know what is behind this sentence. In the end you are now you see the situation is depressed, or you see some opportunities that can speed up the pace of monetization? I would like to ask may be a relatively large problem. I know that monetization is a very early stage and it has not even begun. In fact there are few platforms with 1 billion users but no monetization, so you may think there are many opportunities here, but maybe not. Maybe people are making a mistake when trying to consider Asian assets. When you consider the real opportunity, what exactly makes you sure that Facebook can monetize these assets in five years?

Zuckerberg: We are currently in a stage where we try to find out what we are going to invest in next year, to develop our long-term planning, which of course I think we should invest heavily in one of the areas where I believe there is a huge opportunity , Can speed up all our initiatives.

As you said, I do think that this is one of the few areas of business, you can look at the current information platform to see how they successfully in the rest of the world to achieve monetization, and then make it a basic platform The I think that over time we should be able to do better, but at least provide the reasonableness of existence, no matter what our internal logic is, no matter what we are doing, at least someone has done it. This gives us a certain degree of confidence.

But I feel there is a clear development trend, we first let the consumer to use it, and then between people and enterprises to establish an organic interaction to ensure that it is effective for people and businesses. Once you have done this, the quality of these interactions will determine what size you can develop to.

We also saw this in the News feed. One of the factors that affect the change in ad load is ad quality. If the quality of the ad is low, we can not serve a lot of advertising because people do not want to advertise. But in many of the world's markets, we see that ad quality is improving at a very fast pace, so many times people will take the initiative to get content, which of course creates a very different dynamic trend.

So we need to do this in the field of news. Because the message is really from the people to communicate with each other, and now add a lot of other uses, we also need to increase the amount of investment and a lot of different functions. But in any case, the experience we have achieved in doing so has proved how it works in the market, and I think in the long run I am very confident that we will achieve this goal and strive to achieve this goal is that we work.

Weiner: I add that we do not know what level it is. We have accumulated more experience on data-based products, so we know how it works, and now it's still very early.

John Blackledge, an analyst at Cowen and Company: I asked two questions about Messenger. I know that this is still very early stage, but I want to know is whether you think these ads will Facebook and Instagram core advertisers to play a greater role in supplement, or they will serve different advertisers or Core Facebook and Instagram different use cases? The second question is that if the maximum value of the operating expenditure budget, the second half of the operating expenses growth rate will reach 53%, while the first half of the growth rate of only 36%. I just want to know, in addition to the number of employees, there are no other factors led to the second half of the operating expenses growth? Is video content investment the second most important factor driving growth in the second half of the year?

Sandberg: In terms of Messenger advertising, I think we look at this problem as Mark said, that is, we have a lot of work in this form of advertising to do. This is not a product based on data flow, this is a news product. It is a different form of consumption, we believe that the form of advertising should follow the habits of consumers, so it is as part of the experience is integrated. This is where we have a lot of work to do.

We do think that once we determine the form of advertising, advertiser customer base, ad targeting and ad detection will be a very significant advantage. We already have 5 million advertisers on Facebook and 1 million advertisers on Instagram. One of the reasons why we have been able to advertise on Instagram more quickly is that we have created Facebook's advertiser customer base. Similarly, our work on Facebook, Instagram and Audience Network will help us expand to Messenger.

But because there is still a lot of problems in the monetization of the Messenger platform, so we want to emphasize that our behavior will be very slow and careful. We always focus on the long term, we do not want to split the company into a small piece of a small piece of management, we want to protect consumer products and consumer participation. News products for the company and the user long-term participation is an important strategic significance, business and consumer interaction will be the focus of our attention. So this year this is still in a very early stage, and this stage will continue for a long time.

Weiner: In terms of operating expenses, it is clear that the biggest factor driving growth in operating expenses is the accelerated growth in the number of employees. In addition, I also mentioned that video content would also be a factor driving growth in operating expenses. In addition, we are still supporting the global expansion of this platform. We will continue to see user growth. We will continue to see Facebook all applications and the main platform for active users spend an average time on the growth, we will continue to build more data centers. This will have an impact on revenue costs.

As a result, growth in operating expenses will be the result of various factors. But as you mentioned, the increase in the number of employees, especially the increase in the number of R & D staff and the increase in content investment will be the main factor driving the increase in operating expenses. In the second quarter of this year, the number of employees in the R & D department increased by 48% year-on-year.

Citigroup Global Financial Analyst Mark A. May: Cheryl, you mentioned a case study that discussed the benefits of short video advertising. But I hope you can talk about the situation in which you have tested the advertising for several months. What is the progress of this kind of advertising conversion? Do you now begin to promote this form of advertising on a much wider scale? David, you just mentioned that increasing interest in video may affect the growth of advertising impressions, but do you think that increasing interest in video ads will drive higher advertising prices and increase the number of available ad slots?

Sandberg: In advertising, we are currently testing the ability to insert short video ads in uploading videos. If a video is longer than 90 seconds or the live video is longer than 4 minutes, we will test to insert a short video ad. We are promoting this short video ad form to more publishers in the United States and are still at a very early stage.

As for the advertising indicators we are concerned about, this question is good. Obviously, we care about people's perception of advertising, but the most important thing is to put these ads impressions and we have been talking about the purchase of data together. Therefore, when we are committed to the introduction of more advertising, we are very slow, we are really concerned about looking for more ways to help marketers to focus on the correct indicators, which is a very important company forward focus point.

Weiner: Mark, you ask the video and its impact on price growth. I may take a step back and look at the problem from the perspective of the whole system. From the supply point of view, many factors will affect the growth of advertising impressions, I mentioned the advertising growth slowdown and increase the video viewing time, which is one of the two factors. In view of the auction will promote advertising prices, supply growth and price growth will always exist between the interaction, so we really pay attention to our advertisers to bring a better return on investment.

Cheryl said in previous comments that if we can get better impressions of advertising impressions, ad impressions can be better translated into something valuable to advertisers, we will get better prices and higher Of the demand, which is the result of hard work. This is not necessarily related to video, it is extensive. So if we can continue to do this, it will be conducive to price increases. If we can increase demand faster and allow demand to grow faster than supply growth, we can see changes in prices. This is the goal of the advertising team's efforts, these efforts is to make our products better and more effective for the advertisers.

MoffettNathanson analyst Michael B. Nathanson: David, you just mentioned that this quarter's unit price rose 24%, can explain the reasons for the growth of what? Which products the price chain or the largest increase in the same period?

Weiner: I am referring to the overall dynamics of the whole system. Moreover, we see that supply growth slows, which will drive prices to continue to rise. We have been effective in providing advertisers with a good return on their investment and better translating the advertising spaces we own into what they care about. From the system point of view, this is the case.

From the product point of view, when we launch some products such as dynamic product advertising, these products are very valuable. When we associate more advertisers with these products and introduce more data into the system, we can get more and more targeted and relevant advertising impressions, and then we will get a better price , We can extend it to other products such as Lookalikes. We've talked a lot in this conference call. This basically requires a very good positioning and promotion in a larger audience, and then we can get more valuable advertising impressions, because we really associate it with the advertisers most valued the end result. Everything we do is to make the system getting better and better, so we've been trying to get higher penetration for these key advertising products.

In terms of supply, it is clear that News Feed is valuable because it is for consumers. We have improved the quality of the News feed, which is another factor driving supply growth.

MK J. Partners analyst Rob J. Sanderson (Rob J. Sanderson): as if the entire conference call are talking about the problem of currencyization, so I do not intend to mention this problem. What is the user's response to Messenger ads compared to what you saw in the early stages of testing a News Feed ad? Second, the development of the robot on the platform is very fierce momentum. Did you see how robots can enhance organic interaction? Does this make Messenger an important advertising platform? Or do you think that providing these other business services can bring other monetization opportunities that are different from advertising?

Sandberg: It's too early to understand the impact these ads have on consumers, because the number of these ads is not enough, and they are not long enough. In terms of robots, what we really consider is to let the business and people in the Messenger and any platform for effective contact. If this link is useful to marketers, businesses and users, then it will grow. We think that automated robots can be very useful, and we are willing to accept other forms of useful things.

I think that when you consider spending, this is a problem we face, which includes both marketing expenses and other expenses incurred when an organization is in contact with a user. If only for marketing expenses and customer service expenses, Marketing spending will obviously be bigger, because marketing spending will grow as sales grow, and customer service spending is something that people have always wanted to control as much as possible. So, we think that we must develop organic links, whether it is automated or personalized, and only these organic links can drive our customers' business growth.

Pivotal Research Group analyst Brian Wieser: The European Commission promulgated the GDPR (General Data Protection Regulations) and related privacy measures will affect Facebook's business, either positive or negative, Will these policies around privacy protection become global standards? Do you think these policies will have any impact on consumer products and advertising? In addition, I am curious that some advertisers who are particularly concerned about third-party tools are openly saying that they will reduce their spending. Obviously, others are increasing their spending. How much have you broken down these concerns and regained these expenses?

Sandberg: When we consider regulatory issues, GDPR or other such issues, we respect local laws and regulations. We must work closely with regulators to ensure that they understand our business practices, understand how we contribute to the economic growth of their country, and understand what we have taken and will continue to take to protect our privacy. Of course, regulation has always been the focus of our attention, and we strive to ensure that we clearly illustrate our business and that regulators are aware of what we have taken to protect our privacy and to ensure our compliance.

On the question you asked, I think you asked the question of third party certification. We are very interested in ensuring that the marketer is able to verify or evaluate the results of advertising through a third party, which is why we are trying to expand our partnership.

Deutsche Bank analyst Lloyd Walmsley (Lloyd Walmsley): You have talked about the importance of building organic interaction between consumers and businesses, and I want to know if you can talk about how much such interaction is To the extent of the consumer and business acceptance? Is this organic interaction popular in some vertical areas or in certain areas? The second question, you have already said that the impression of advertising growth and it will slow down in the second half. In the first half of the year, you have seen a dramatic slowdown in advertising impressions, and as you said, as prices slowed and prices rose, because you brought more return on investment to customers. Then my question is, why this phenomenon will not continue in the second half of advertising revenue growth?

Zuckerberg: There's already a lot about Messenger. Overall, I'm glad to see that the experience we see on Messenger is growing fast. But if there is a message that I think is important, that is, we try to pass the information that the growth of the Messenger business is a long-term goal. In fact, I think in the next two years or years, to promote the growth of this business more power and decide how we will do the video will be video, not Messenger.

I think that Messenger is more important than whatsApp in the next three to five years. I think it's a great opportunity. As we have pointed out at the conference call, the video is very large, and its economic benefits are very different from the current data-based business, especially in advertising and conversion sharing, profit margins are different.

So, what i mean is that when we build Messenger, it will be a big concern for us. We are very concerned about its construction, because it is the community people want something. But one of the big things that we are concerned about is that our approach is correct, and even if the profit margins of this business are lower than our current business (which is unlikely), how behavior is growing is also a big problem.

I just made this big premise, because today I have mentioned a lot of issues related to Messenger, I want to make sure that we make these issues clear, will be thorough, accurate and complete communication of our business ideas and Its future development prospects. I think these issues are related to video, I am optimistic about the development prospects of the video, but the real problem is that we must manage it, which is the next two to three years to promote the growth of the company more power.

Weiner: You asked why the work we are doing is to provide the advertiser with the value that will be reflected by the price. This is the reason there is. These jobs will make our advertising more targeted, so that advertisers get more valuable results. We will continue to work to do this, we will continue to invest in improving the advertising products, we think we still have a great opportunity to continue to improve the return on investment.

But it is clear that if prices go up, it will have a negative impact on upstream trends, so we need to continue to work for advertisers to provide more value. So we streamline our work and we think we have built up a good team to meet these challenges.

Macquarie Capital analyst Benjamin Schachater: Mark, you said that AR hybrid reality may be the next computing platform. Obviously, this is the way out of the future. But if that means a lot of room for development, how do you consider allocating resources? How much do you like to spend on it and any new ideas related to it? Related to this, the next iPhone is coming soon. Do you think it will have a meaningful effect on AR evolution?

Zuckerberg: This is definitely my long-term concern. It is not only possible to become the next major computing platform, AR and VR may be more than we have today some of the equipment more social, more intuitive and more natural, which is why I am interested in it.

When you think of AR glasses, technology and science will create a perfect experience, so AR glasses are very comfortable to wear, but also let people willing to wear in public, but now can not do this. So, there are a lot of basic work to be done. That's why I'm excited about virtual reality work because it does not have that limit. You will not wear VR devices in public, but recently we see such a phenomenon, there are a lot of mobile devices on the AR experience. So we started talking about this work at the F8 conference, and we will be releasing it slowly over a year, which is one of the reasons why I am excited about this ecosystem.

But if I just say that video will be one of the main drivers of the next few years or one of the key drivers, Messenger is probably the next factor, and I think it will be very far behind. But when you run a business on this scale or serve people, I think you have the responsibility to invest in all the things downstream, these things can help shape and improve people's lives, I do not think this world there Other people will do it

So I think that is one of the things we take seriously, whether it is to connect people around the world or to ensure that people around the world enjoy and benefit from the Internet, from AI to improve or upgrade the computing platform to bring the opportunity, We all attach great importance to it. This kind of thing does not happen automatically. Need someone to pay attention to it, focus on building it, we want to participate in this process.

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