Facebook's second-quarter earnings call points toward focus on video content

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You’ll be seeing a lot more video on Facebook in the near future, and your musings will be easier to access.

CEO Mark Zuckerberg told investors on Wednesday’s second-quarter earnings call that “connecting people with more great video content is an important part” of the company’s future, and the company will improve its searchability – Facebook has already indexed some 2tn posts.

Users had sent out some 40% more videos to their lists of friends and followers, Zuckerberg said, and the company was encouraging them to share still more. (Facebook’s own video advertising is more valuable per advertisement than its text and image ads.) “This quarter we updated our newsfeed ranking to help people see more videos they care about,” Zuckerberg said.

In many cases, this gives advertisers better access to the users it wants: when Acura rolled out the TLX earlier this year, said COO Sheryl Sandberg, Facebook showed a series of ads featuring the car in odd situations. “Retargeting technology then showed more ads only to people who watched the videos,” Sandberg explained.

Facebook’s second-quarter earnings report beat predictions but still failed to please investors on its own merits, as the stock immediately fell by 5.4% in after-hours trading before rallying.

This quarter’s spate of after-hours stock slumps – including Twitter and Microsoft in the past few days – following less-stellar-than-expected earnings continued unabated, as the social media company stayed ahead of the market but left shareholders grappling with the stock’s value.

But the Facebook dip lasted only minutes, recovering as execs told investors that the company’s core business is thriving. Facebook’s user base is fully 1.49 billion people this quarter – up 13% year-over-year.

Facebook continued to rake in vast sums in advertising revenue, with its ad business up a full 43% from an already-healthy $2.68bn to $3.82bn. That accounts for 95% of its $4bn revenue line over the past three months, as ad revenues in other sectors – notably, broadcast television and print media – lose traction.

Brian Weiser, senior analyst at Pivotal Research Group, said Facebook and Google Display Network (GDN) were the 2,000lb gorillas of digital advertising. “GDN is probably doing $7bn or $8bn of advertising,” Weiser estimated. “GDN and Facebook are probably growing at the same rate right now. There’s next to zero growth for everybody else – [the others] are mostly niche players.”

As it grows, that advertising business is migrating increasingly toward your phone: mobile accounted for three-quarters of Facebook’s ad business, a line it proudly broke out for investors.

Powered by Guardian.co.ukThis article was written by Sam Thielman in New York, for theguardian.com on Wednesday 29th July 2015 22.30 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010