Zuckerberg outlines Facebook's ambitious 10-year plan
Within the next decade, the social network expects to have a few billion users, personalized ads, and a superintelligent search engine. It also says it'll be highly profitable.
The social network that yearns to connect the entire planet seems to be connecting with users, advertisers, and investors -- and its CEO wants to keep it that way as we move further into the new millennium.
More than 1.23 billion humans are now active on Facebook each month, with the company up 16 percent year-over-year in monthly average users and 22 percent in daily active users.
The money is flowing as well. Advertising revenue grew 65 percent in Facebook's four core geographic regions year-over-year in the fourth quarter. While total advertising impressions declined 8 percent in Q4 -- as a result of showing fewer ads to mobile than desktop users -- the average price per ad was up 92 percent over the previous year.
The market likes the financial results too. Facebook's stock was up more than 15 percent in early trading today. It appears that the dynamic duo of Mark Zuckerberg and Sheryl Sandberg have instilled confidence among traders in their ability to execute and grow the business, at least for the next few months.
During the earnings call, Zuckerberg was clear on where Facebook is heading, outlining three phases in a 10-year plan.
Internally, we talk about our strategy, and there's a 3-year strategy, a 5-year strategy, and a 10-year strategy," he said. "And the 3-year plan is really all about building new kinds of experiences for sharing, like so many of the questions on this call have been about. The 5-year approach is really mostly about helping people use their network to answer interesting questions or solve problems that they have. And that's where all the Graph Search work and the Open Graph work and some of the early parts of the AI work that we're doing you're going to start to see over that period of time. And then over a 10-year period, I think you'll really start to see a lot of the impact of some of the Internet.org work that we're doing, where hopefully we'll see some impact a lot sooner than that as well.
In the three-year horizon, Facebook expects dramatic increases in its average revenue per user, even as it adds a few hundred million more members. The increases will come from more personalized and contextually relevant ads that generate more engagement and command higher fees.
"This shift to personalization represents the biggest shift in marketing in generations, and it's one that we are uniquely positioned to lead," Sandberg said during the earnings call. "Facebook is the only place where 750 million people visit every day, increasingly on mobile, to discover what matters to them. As we continue to leverage our understanding of people to make marketing more personal, and do it at massive scale, we will dramatically improve the quality of ads and drive more personal discovery."
In addition, Facebook is moving away from its monolithic app to a set of mobile apps that are expected to drive deeper engagement and fend off competitors.
"In terms of the focus on building new and separate experiences, our theory is that there are all these different ways that people want to share and communicate. Almost any kind of content that you can imagine sharing: text, photos, videos, links, locations, events, games -- any type of content, with any type of audience. You know, whether it's privately in a one-on-one situation, or small groups, or with all of your friends, or a larger community, or publicly," Zuckerberg said.
This week Facebook introduced Paper, a Flipboard-like reader app, that joins Messenger as a standalone app that offers a different and more custom experience than the main Facebook service.
In parallel, Facebook is trying to create a next-generation search engine with Graph Search and its investment in artificial intelligence and neural networks. "Understanding the world is helping people share not just day-to-day updates like text messages and photos but also building up long-term knowledge about the world, what people are interested in, which restaurants are good, which hotels your friend's have stayed at and so on," Zuckerberg said during the Q2 2013 earnings call. "We should be able to build intelligent services that help you use your network that could answer lots of questions for you."
A mobile version of Graph Search is expected "pretty soon," Zuckerberg said. However, it will take several years, or a decade, to build a Graph Search that turns the trillions of pieces of likes, posts, photos, and other content into a voice-controlled knowledge base that intelligently answers questions or effortlessly sets up a vacation plan.
Within a 10-year time frame, Zuckerberg wants to make progress on providing Internet access to the two-thirds of people on the planet who are not connected.
"If we can get a lot more of the world on the Internet, I think that's going to really mean a quite different world in terms of what folks in a lot of developing countries have access to...around basic financial services, and people can get credit to start businesses and buy homes -- really life-changing stuff -- or get access to health information or education materials, which I think are just a really big deal. And over the long term, we've always wanted to help out with that, and I think that's where we're going to go on that," Zuckerberg said.
In sum, Facebook's 10-year plan appears to be as follows:
Ten years is a long time in Silicon Valley, but Zuckerberg says the company now has "greater scale, ambition, and resources" to compete. Those three words -- "scale" and "resources," with "ambition" in the middle -- are indicative of Facebook's strategic advantage at this juncture. Zuckerberg and Sandberg are clearly ambitious and have scale and the resources to take Facebook to another level. Now it's more a question of executing over the next decade as well as they did last quarter.