Zuckerberg: Facebook’s Focus On Ad Revenue, Not Payments

Earlier this month, PYMNTS.com reported that Facebook is testing a “Buy” button that allows certain customers to purchase items placed in the news feed or on ads on the site with a click or two. But don’t expect Facebook to compete against the likes of Kmart.com or Walmart.com anytime soon.

During a July 23 second-quarter earnings call with analysts, Cheryl Sandberg, Facebook’s chief operating officer, acknowledged the “small test” being done in the U.S. only, but cautioned against looking too deeply into it.

“It streamlines the process for buying from our clients,” she said. “No one’s buying from us. We’re just streamlining the process of buying from our clients.”

Commerce is really important and is a growing part of Facebook’s business as its marketer segments are growing, Sandberg noted. “But I don’t think people should confuse that with Facebook selling things directly,” she said.

Indeed, “the more people buy things they discover through their mobile phone, the more people discover things from news feeds and go on to purchase, the more important we are in driving commerce,” Sandberg added. “And I think we are increasingly important. But that doesn’t mean we’re going to sell our own products.”

Facebook basically is a partner to other companies in the payments space rather than trying to compete directly for that, added Mark Zuckerberg, Facebook founder and CEO. “Our main business is advertising, and to the extent we do payments it’s going to be supportive to that,” he said.

As for other apps Facebook owns, including Instagram and Messenger, and how payments might play a role, Zuckerberg noted that Facebook has a lot of work ahead of it to set up the foundation for a good business community. “We think it’s going to be years of work before those are huge businesses for us,” he said.

As for David Marcus, PayPal’s former president who is running Messenger, Zuckererberg defended hiring a “payments guy” to the role. “There will be some overlap between Messenger and payments, and it will be part of what will help drive overall success,” he said. “We have a lot of work to do, and we could do the cheap and easy approach and put ads in and payments, but we’re not going to. … We’re going to do it over multiple years.”

During the quarter, payments and other fees revenue totaled $234 million, a 9.3% increase from $214 million the same quarter last year. Regionally, U.S. and Canada topped the payments and other fees revenue at $133 million, up 4.7 percent from $127 million a year ago. Europe was next at $67 million, up 24.1 percent from $54 million.

Daily active Facebook users totaled 829 million on average in June, up 19 percent year over year. Mobile daily active users totaled 654 million, up 39 percent. Monthly active users totaled 1.32 million as of June 30, up 14 percent from a year earlier, while mobile active users totaled 1.07 billion, up 31 percent.

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