4Q EARNINGS CALL: Ebersman Ducks Teen Question

For the fourth consecutive earnings call, questions were raised as to whether Facebook usage is slipping among teens, and the question appears to be getting old to Chief Financial Officer David Ebersman, who barely dignified it with a response during the question-and-answer portion of the company’s fourth-quarter earnings call Wednesday. When JPMorgan Analyst Douglas Anmuth asked for an update on teen engagement trends, Ebersman would only reply: In terms of teens, we don’t have any new data to report today. As you know, we take engagement very seriously, and we’re focused on building great products that all our users, including teens, will find useful and engaging. And that’s the most important thing for us to stay focused on. With studies like this one, this one, and this one continuously catching the attention of Facebook watchers, the question has come up during every earnings call this year. In response to a question from Mark Mahaney of RBC Capital Markets during the first-quarter-2013 call, Ebersman said: I guess I’d start by saying that we remain really pleased with the high level of engagement on Facebook by people of all ages around the world. You asked about people under 25. We continue to have really high penetration rates among that age group, both in the U.S. and globally. And the younger users remain among the most active and engaged users that we have on Facebook. And then in addition, younger users are extremely active users of Instagram, as well. So that’s great and makes our position even stronger. I think, from our standpoint, the urban legend you referenced sort of flows more often than not from surveys people have done of younger users that indicate that they’re using other social services. And we take this feedback seriously, but our sense is that much of the concern stems from the assumption that this is a zero-sum game, and that’s not how we see it. We think the overall amount of time spent on services that enable you to connect and share is growing and will continue to grow, because these kinds of services are really engaging and good. And it’s great for us to be the leader in a market that’s expanding rapidly with the foundation we have with both Facebook and Instagram, and I guess the challenge for us is to just continue building great products that appeal to users of all ages. Co-Founder and CEO Mark Zuckerberg addressed the teen issue in his opening remarks during Facebook’s second-quarter-2013 earnings call: One specific demographic I want to address is U.S. teens. There has been a lot of speculation and reporting that fewer teens are using Facebook. But based on our data, that just isn’t true. It’s difficult to measure this perfectly, since some young people lie about their age. But based on the best data we have, we believe that we are close to fully penetrated in the U.S. teen demographic for a while, and the number of teens using Facebook on both a daily and monthly basis has been steady over the past year-and-a-half. Teens also remain really highly engaged using Facebook. Now it’s also worth mentioning that these stats are for Facebook only. Instagram is growing quickly, as well, so if you combine the two services together, we believe our engagement and share of time spent are likely growing quickly throughout the world. Ebersman was at it again during the third-quarter earnings call, saying: I want to say a few words about user engagement on Facebook. As we have said previously, this is a hard issue for us to measure, because self-reported age data are unreliable for younger users. So we have developed other analytical methods to help us estimate usage by age. Our best synopsis on youth engagement in the U.S. reveals that usage of Facebook among U.S. teens overall was stable from the second quarter to the third quarter, so we did see a decrease in daily users, specifically among younger teens. We won’t typically call out such granular data, especially when it’s of questionable statistical significance given the lack of precision of our age estimates for younger users. But we wanted to share this with you now since we get a lot of questions about teens. We are pleased that we remain close to fully penetrated among teens in the U.S., our monthly user numbers remain steady, and overall engagement on Facebook remains strong. We will continue to focus our development efforts to build products that drive engagement for people of all ages. Shortly thereafter, in an interview with Mike Isaac of AllThingsD, Chief Financial Officer Sheryl Sandberg said: I think the reaction to that comment has been blown out of proportion. As we said on the earnings call, overall U.S. teen usage of Facebook remains stable. The vast majority of U.S. teens are on Facebook. And the majority of U.S. teens use Facebook almost every day. I feel like I’ve lived this before. When I was first at Facebook just a few years in, adults were getting into Facebook in larger numbers, and there were all those memes that popped up -- “Oh my God, my mom’s on Facebook!” and that sort of thing. I’m pretty sure “Saturday Night Live” even did a skit on it. One of the challenges we face right now is that we’re a decade old. That means that we’re not the newest. And often, particularly in our space, newer things are shinier and cooler. And what Mark has said, and what we all believe, is that we’re not trying to be the coolest. And we’re not trying to be the newest. We’re trying to be the most useful. I think if you look at the way teenagers continue to use Facebook, we are useful to them. Readers: Are fewer teens using Facebook? Image courtesy of Shutterstock.

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4Q EARNINGS CALL: Ebersman Ducks Teen Question

David Cohen

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