After IPO, Facebook Gets Serious About Making Money

Ana Ghoib Syeikh Malaya 3:02 PG
 

On the anniversary of its IPO, mobile is taking off on Facebook. So why did revenue decline last quarter? WSJ's Jason Bellini has "The Short Answer." Image: Getty

Two weeks ago, new posters began appearing at the headquarters of Facebook Inc. FB +0.46% The posters proclaimed: "Advertisers are users too*." At the bottom of the page, in smaller font, was the phrase "*no srsly," Internet shorthand for "no seriously."
On the eve of Facebook's IPO anniversary Saturday, how the company tackles revenue is one of the biggest challenges in its short life as a public company. Evelyn Rusli joins MoneyBeat. Photo: Getty Images.

On the eve of Facebook's IPO anniversary Saturday, how the Menlo Park, Calif., company tackles revenue is one of the biggest challenges in its short life as a public company. After eight years of focusing on user growth, Facebook has pushed revenue up its priority list and restructured its business so that many of its best minds are now thinking about driving sales.

Before filing for its IPO, Facebook made 85% of its revenue from desktop ads in the right-hand column of its website, with the rest coming from a payments business fueled by virtual-goods sales from Zynga Inc. ZNGA +0.30% games.

Today, the company is experimenting with more than 10 other ways to make money, including a fledgling e-commerce store and fees that it charges users to send chat messages to strangers.

Facebook has also broadened its ad business, running ads for the first time on mobile devices, in its News Feed, and creating special widgets for mobile, such as ads that promote installations of third-party applications. Facebook has also introduced products familiar to advertisers, including tools that target people based on their website visits or their offline behavior. And it has reorganized itself so project managers and some engineers take ownership of revenue targets.

The changes have helped lift Facebook's revenue to $1.46 billion in its most recently reported quarter, up 36% from $1.06 billion in the same period a year earlier. A quarter of the company's revenue now come from mobile ads.

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