http://www.businessweek.com/articles/2013-10-30/facebook-hums-along-eyes-phase-two

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Facebook Hums Along, Eyes Phase Two


There was a day when Facebook struggled to prove it could be a real business, back when the social network seemed to have missed the train on mobile and couldn’t seem to convince advertisers of its value. That was, oh, 18 months ago.

On Wednesday Facebook far exceeded expectations when it reported its quarterly earnings. The company made $2.02 billion in revenue (investors expected $1.91 billion), 49 percent of which came from mobile. Its monthly active users grew 18 percent over the last year to 1.19 billion. Every day 728 million people use Facebook, with 507 million people logging onto mobile.

The company did sneak in one ominous tidbit: its growth among American teenagers has flattened, and the company is actually losing users among younger teens. The company said it wouldn’t be regularly updating investors on what was going on with young users, because the numbers may not be reliable.

So what does the company do now? Different things in different places. In the United States, Facebook is focused on figuring out how to make more money from each user through advertising. People are seeing 85 percent more ads on Facebook than they were a year ago, according to a recent analysis by Adobe, and Facebook says that it’s not not going to pack more ads into the news feed. Still, there’s room in other places, most notably Instagram, which is just beginning to experiment with ads. The company has also been tweaking its tools for advertisers, after getting complaints about how confusing its advertising products were.

In the rest of the world, the company wants to create new Facebook users by creating new Internet users. At the top of the company’s press release was a two sentence statement by Mark Zuckerberg. “For nearly ten years, Facebook has been on a mission to connect the world,” he said. “The strong results we achieved this quarter show that we’re prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy.”

It’s not the first time Zuckerberg has mentioned that goal; earlier this year he launched Internet.org, a non-profit intended to increase Internet access in the developing world. At some point soon, says Garner analyst Brian Blau, an analyst with Gartner, that may be the only way the company can reliably add new users.

Brustein is a writer for Businessweek.com in New York.

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