After Facebook's (META 2.98%) better-than-expected third-quarter results, much of the focus has been on its key financial metrics. Of course, this is for good reason; Facebook is crushing it. Even the most bullish projections for the social network's business when the company went public have turned out to be far too conservative.
But there's more than Facebook's analyst estimate-crushing financial results to focus on following the third-quarter report. In particular, there were some notable tidbits discussed during the earnings call. Here are some points worth mulling over.
Instagram ads are rolling out everywhere
Facebook has undoubtedly capitalized on a shift to mobile. Mobile advertising revenue now represents 78% of total ad revenue. But how can the company capitalize on this shift even further? By expanding ads on mobile-focused Instagram.
Instagram is a mobile machine. Not only are there many hyperactive mobile users on the platform, but the mobile experience on Instagram is also very immersive and visual. This makes Instagram very interesting real estate for advertisers looking to ramp up their investments in mobile advertising.
Instagram. Image source: Instagram.
Facebook knows this. And the company is executing rapidly. Consider all the moves the company is making for ads on Instagram, discussed by Facebook Chief Operating Officer Sheryl Sandberg:
This quarter on Instagram we introduced new ad formats and objectives, opened up our API, and launched self-serve ad capabilities. Instagram ads are now available in all countries where we offer Facebook ads, and marketers can manage campaigns across both platforms with the same targeting.
And Facebook's rollout of ad products on Instagram already shows promise for contributing meaningfully to ad revenue.
"We're really pleased with marketer demand for Instagram ads," Sandberg said.
Facebook isn't rushing monetization of messaging
For many social networks, reaching 1 billion monthly active users would be a dream come true. Consider Twitter (TWTR), which is struggling to grow meaningfully beyond its 320 million users today. But reaching 1 billion users for Facebook's WhatsApp, the company says, may not even mark the beginning of more meaningful ad products.
"On WhatsApp, I don't think there's a particular magical number with 1 billion users," said Facebook CFO David Wehner when an analyst asked about the timing of monetization as the platform approaches 1 billion users. "The focus really for our messaging products is to continue to drive user growth and continue to build great products that are fast, useful, engaging, and fun."
WhatsApp. Image source: WhatsApp.
Facebook's Messenger and WhatsApp, at 700 million and 900 million monthly active users, respectively, are both fortunate to be in a position where monetization can remain an afterthought and user experience and user growth can remain the No. 1 priority.
This lack of pressure for these platforms to be monetized is likely relieving for Facebook management. It frees teams running these products to focus on the long term. Consider how Twitter, having already rolled out advertising significantly, is already under pressure from investors to continue growing its ad revenue. And this pressure is paired with investor concern about the company's user growth. Facebook's Messenger and WhatsApp, unlike Twitter, don't have to worry about users and monetization at the same time.
Investors should be patient about monetization of these platforms, just as Facebook management is. The user experience in social platforms should always come first, as it correlates with the long-term potential of the platform
Twitter may want to take a tip from Facebook as it thinks about monetization of Periscope and Vine -- two of its Twitter-owned social platforms. Indeed, maybe Twitter is.
Facebook's third-quarter earnings call contained a range of interesting angles on the underlying business, as well as on management's vision for the future. Investors can find a recording of the call on the company's investor relations page.
