Facebook COO Sheryl Sandberg shared today on the company’s first quarter earnings call that its acquisition of Atlas from Microsoft closed last week and that she welcomed the team to Facebook today.

Atlas Advertiser Suite is a platform that advertisers and agencies use to plan, manage, track and optimize their digital marketing. Facebook agreed to buy the platform and Seattle-based team from Microsoft at the end of February.

Sandberg said Atlas is important for its measurement capabilities, not its potential to power an ad network, which many have speculated about. She said Facebook has “no plans” to create an ad network to serve Facebook ads on third-party sites. Atlas will continue to be a tool for advertisers to measure the effect of their online ads on Facebook and other platforms.
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Facebook CEO Mark Zuckerberg said on today’s first quarter earnings call that mobile app install ads were “one of most important new ad products” the company offers.

COO Sheryl Sandberg pointed out that 3,800 developers used the product to drive a total of 25 million app downloads in the App Store and Google Play. Forty percent of the 100 top-grossing apps for Android and iPhone have advertised on Facebook, Sandberg said.

CFO David Ebersman said that mobile app install ads actually lead to a lot of incremental revenue, as many of these developers are newly spending on the Facebook platform, not just reallocating existing budget to a newer format.
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Facebook plans to announce its 2013 first quarter earnings tomorrow after the stock market closes.

Analysts expect earnings of 13 cents per share on revenue of $1.44 billion during the period of Jan. 1 to March 31. In Q4 2012, which included the holiday season, Facebook had earnings of 17 cents per share on revenue of $1.585 billion.

Here we’ll review the changes Facebook made in the first quarter across each of its areas of monetization.

Ads

Last year advertising made up 84 percent of Facebook’s overall revenue. In the first quarter of this year, the social network introduced new targeting capabilities and made a number of adjustments to the look and performance of its ads. The company also continued to ramp up the amount of ads in News Feed and on mobile, adding a three-in-one “Pages You May Like” unit and a new type of Page-Like ads to the mobile feed.

Partnerships with data vendors Datalogix, Epsilon, Acxiom and BlueKai opened up the opportunities for advertisers to reach new audiences based on third-party data, such as offline purchase behavior. This feature was in limited beta during Q1, but rolled out more widely as “partner categories” earlier this month.

Lookalike Audiences, which help advertisers target users similar to those in their Custom Audience databases, was another exciting new beta feature for advertisers last quarter. Facebook launched it globally in March.

A tool that was available for most advertisers throughout the quarter was conversion tracking. This allows advertisers to measure and optimize their ads leading off-Facebook. It’s particularly important to direct response advertisers and app developers.
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There’s a vision many people have when they think about mobile advertising. Hyperlocal, real-time, something that incorporates features like text, push notifications, QR codes and GPS.

Facebook News Feed product manager Jeff Kanter says that idea is interesting, but for now, mobile ads can be much simpler and still be effective.

“A lot of people will talk about the holy grail of advertising where you’re walking down the street and your phone is buzzing with alerts about deals around you and a movie’s playing nearby,” he says. “I think it’s an awesome vision and the world will get there, but at this point in time, mobile advertising is working really well because it’s where people are spending their time and it can achieve the same brand objectives that advertisers are trying to do elsewhere.”

Many have imagined Facebook would be well-positioned to lead the way in this “holy grail” future, which would rely on powerful identity and location data, as well as a platform that could reach a large audience with enough frequency. But for the social network, which only got into the mobile ad business one year ago, it’s all about the basics first.
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Facebook users who have bought an item through Facebook Gifts are seeing a new dashboard with their purchase history and prompts to buy more gifts for friends.

The dashboard only appears to be available to users who have sent gifts already. Users who have not are directed to an introduction page with a video and more information about Facebook Gifts.

The dashboard page displays upcoming birthdays and friends with recent special events, such as engagements, weddings or births. Users will also see a row of friends, which changes every time they visit the page. Clicking one of these thumbnails opens up the Gifts storefront. Facebook also offers users the option to look through its catalogue without first indicating who they are shopping for by clicking “Browse Gifts” or “Give a Gift.”

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Approximately 27 million users bought virtual goods using Facebook Payments in 2012, up from 15 million in 2011, according to a document the company filed with the Securities and Exchange Commission today.

Facebook generated $810 million in payments revenue in 2012. CFO David Ebersman said only $5 million of that came from sources outside of games, such as Gifts and user promoted posts. Overall, payments and other fees revenue in 2012 increased $253 million, or 45 percent, compared to 2011, despite close to doubling the number of users buying virtual goods.

That could be because of Facebook’s promotions to get more users spending money in games. Although the volume of paying users increased, it the amount new payers spend could be much less than other players. Another factor could be growth in international markets. Facebook says 51 percent of its revenue from marketers and developers based in the United States, compared to 56 percent in 2011. This figure includes advertising revenue as well, but international developers are increasingly finding success on the social network and the overall number of international users is growing much faster than in the U.S.
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Facebook today announced the Facebook Card, a resusable gift card that can be loaded with balances for different retailers when a user’s friends buy them gifts through Facebook.

The social network has added a number of new partners to its Gifts platform, including Target, Jamba Juice, Olive Garden and Sephora, who will offer gift cards to be purchased on Facebook. But instead of sending individual gift cards for each restaurant or retailer, or sending multiple gift cards for the same business, Facebook will send users one card that can maintain balances for several outlets.

For example, someone might receive a $50 gift card to Target. They’ll receive a Facebook Card in the mail. When another friend gifts them $10 to Jamba Juice, that amount will be automatically added to the same Facebook Card. Users will be able to view their different balances on Facebook.com and within the mobile app. Facebook says this option will roll out to U.S. users beginning today. Because Gifts are not available internationally, Facebook Card is also limited to the U.S. for now.

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Facebook shared new statistics about some of its latest products for business pages today on its fourth quarter earnings call, including that nearly 500,000 pages have used Promoted Posts and 42 million users have claimed an Offer.

COO Sheryl Sandberg said revenue from local businesses was strong in Q4 2012, with the number of local businesses paying for advertising on Facebook doubling since the beginning of 2012. Sandberg says this is in large part because of Promoted Posts, which make it easy for businesses to buy ads directly from their pages instead of the more complicated ad dashboard. This product rolled out in June, and by December 300,000 pages had promoted 2.5 million posts. Now Facebook says nearly 500,000 pages have tried the offering, and about 30 percent are first-time advertisers on Facebook. More than 70 percent of pages who have tried Promoted Posts have become repeat customers, Sandberg says.

Then there are Facebook Offers, which are a type of post that pages can use to drive interest and sales for their business. In September Facebook began requiring page owners to spend a minimum of $5 or $10 per Offer, with the option to pay more to promote the deal and reach a larger audience. As with Promoted Posts, costs can vary by page, however the first Offer a page creates is free. Sandberg says costs per redemption for Offers compare favorably to those from email, newspaper, paid search and display media based on data from the Direct Marketing Association. Sandberg didn’t say how many pages have tried these offers, but 42 million claimants is significant. In October Facebook said the majority of users who claim an Offer on the social network do so after seeing a story about it from a friend, not the original page post, indicating the viral nature of the promotion.

Facebook today reported $1.59 billion in revenue for the fourth quarter of 2012 ended Dec. 31 — a 40 percent increase from the $1.13 billion reported in Q4 2011. Revenue from advertising was $1.33 billion, representing 84 percent of total revenue and a 41 percent increase from the same quarter last year.

Facebook today announced that $5 million of its $256 million payments business came from sources outside of games, such as Gifts and user promoted posts during the fourth quarter of 2012.

The company didn’t offer a specific breakdown, but CFO David Ebersman said that user promoted posts were the primary source of that revenue. Ebersman said the company believes in the longterm potential of promoted posts, Gifts and other payments opportunities, but for now they represent a very small portion of overall revenue. Ebersman says the company expects this to continue to be the case through 2013, based on current run rates.

Facebook launched Gifts in September 2012 as a way for users to buy physical and digital gifts for their friends via desktop or mobile. The product rolled out to all U.S. users by mid-December, but the company has not revealed plans to expand Gifts beyond the U.S. for now. Although the company heavily promoted Gifts over the holidays, sales don’t seem to have taken off.
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Facebook today reported $1.59 billion in revenue for the fourth quarter of 2012 ended Dec. 31 — a 40 percent increase from the $1.13 billion reported in Q4 2011. Net income was $64 million down year-over-year from $302 million, but up from the net loss of $59 million in Q3 2012. Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) for the fourth quarter was $0.03, compared to $0.14 for the same quarter in the prior year.

Revenue from advertising was $1.33 billion, representing 84 percent of total revenue and a 41 percent increase from the same quarter last year. Payments and other fees revenue for the fourth quarter was $256 million.

Monthly active users (MAUs) were 1.06 billion as of Dec. 31, 2012, an increase of 25 percent year-over-year. Daily active users (DAUs) were 618 million on average for December 2012, an increase of 28 percent year-over-year. Mobile MAUs were 680 million as of Dec. 30, 2012, an increase of 57 percent year-over-year.

Mobile revenue represented approximately 23 percent of advertising revenue for the fourth quarter of 2012, up from approximately 14 percent of advertising revenue in the third quarter of 2012.

Although ad revenues have been increasing significantly, particularly on mobile, the growth of Facebook’s payments business has been stagnant. Adjusting for $66 million of additional revenue in the month of December because of accounting reasons, Payments and other fees revenue remained flat year-over-year.