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CNBC EXCLUSIVE: CNBC EXCERPTS: FACEBOOK CHIEF OPERATING OFFICER SHERYL SANDBERG SPEAKS WITH JULIA BOORSTIN TODAY ON CNBC

When: Today, Monday, Oct. 1, 2012

Where: CNBC’s Business Day Programming

Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Facebook Chief Operating Officer Sheryl Sandberg. Sandberg sits down one-on-one with CNBC’s Julia Boorstin for the first time since the Facebook IPO. Excerpts of the interview will run throughout CNBC’s Business Day programming today beginning on “Squawk Box” (M-F, 6-9AM ET).

Following are links to videos of the interview: http://video.cnbc.com/gallery/?video=3000119190&play=1 and http://video.cnbc.com/gallery/?video=3000119449&play=1.

All references must be sourced to CNBC.

SANDBERG ON THE IPO

SHERYL SANDBERG: As Mark said, we're obviously disappointed and really surprised by what happened in the IPO. This was certainly not how we planned it. The good news for us is that we're a really focused, product driven company. And so we're taking that energy and really focusing on proving to the world that we can continue to grow our business, continue to grow our users and their engagement, and build a great company, not just for a quarter, but hopefully for decades and decades.

JULIA BOORSTIN: But your IPO has been described as an utter debacle. Whose fault was it?

SHERYL SANDBERG: I'm gonna let others-- go ahead and answer those questions. And I know you have many people who are willing to come on and-- and talk about that. The focus for us is really on the things we can control and the future. We're looking forward to the business we're building, to providing great experiences for users, to the mobile transition and continuing to lead-- for mobile users. And importantly, to really increasing our focus on monetization.

JULIA BOORSTIN: What's happened since the IPO cannot be good for employee morale. What do you tell employees? What do you tell new recruits?

SHERYL SANDBERG: Obviously, employees are disappointed that the stock price has gone down. The good news for employees is that they get to come to Facebook every day and build great products for users. And most of our employees tend to be very mission focused. That doesn't mean the stock price doesn't matter. Because, of course, it does. But they're mission focused. They want to come and build products. If you want to build social products, there's nowhere that's better to work than Facebook and no bigger opportunity out there.

JULIA BOORSTIN: But you must be disappointed in the stock price.

SHERYL SANDBERG: We've said it a bunch of times. You know, as Mark said, we're both disappointed and surprised in the stock price. But we really have to focus moving forward on how we build a business.

JULIA BOORSTIN: A lot of people have come on CNBC's air saying that $15 is a fair-- or somewhere in that ballpark is a fair price for Facebook stock. How do you respond to that?

SHERYL SANDBERG: Not gonna predict stock price movements. But what I dro-- do believe is that we are more valuable company than we were four months ago the day we went public. If you look at what we've done since we went public, we've invested more in monetization. And we're showing great products with great returns for advertisers.

SANDBERG ON IPO's IMPACT ON BUSINESS

SHERYL SANDBERG: Already in the last couple months, you've seen us roll out products pretty aggressively. We've rolled out Facebook Exchange, custom audiences, new mobile ad formats, revamped our offers. And all of these do one thing, which is they help make ads more targeted, more useful, and more effective for marketers on Facebook.

JULIA BOORSTIN: And do you have any new ad products that you haven't announced yet?

SHERYL SANDBERG: Many. One of the things I think you can always expect from Facebook is continual iteration. We roll out products very quickly. We change our products very quickly. But we think that's really important to-- to continue to develop the products we need in the market.

JULIA BOORSTIN: Now Facebook's ad growth has been decelerating. What are you telling Wall Street?

SHERYL SANDBERG: Our growth is something we care a lot about. We believe we have the biggest opportunity-- to grow revenue ahead of us. We are the largest-- we are the largest community of engaged users anywhere on the-- anywhere in the world. Every day on Facebook, we have five Super Bowls, which means you can reach that many people. Increasingly, as advertisers are learning to work with the platform, they're learning and we're helping them learn what works and how they can use this to generate sales. But we think our results are very strong and that we believe we can prove to advertisers that not only do they get a good return on Facebook ads, but they get a better return on Facebook ads compared to most things they do.

JULIA BOORSTIN: So you think Facebook's business model has changed dramatically since the IPO?

SHERYL SANDBERG: The business model hasn't changed, we're increasing our focus on monetization. The cornerstone of our business is advertising. And in that advertising opportunity, you know, it's a $600 billion business, where our results with our clients show that we return results, which are in many cases much better than the return they get anywhere else. That's a really unique opportunity. If you want to-- if you're a business and you want to connect with people, but you also want word of mouth to spread against your business, there's no better opportunity out there. And I think what we've done since the IPO is continue to really focus on building that business. And I think we're executing better and better.

SANDBERG ON FACEBOOK'S MOBILE PROBLEM

SHERYL SANDBERG: Mobile is obviously a huge strength for the company and a huge opportunity. We have a big mobile network, both in terms of our users, over 500 million. But also in terms of the other apps and sites that are enabled with Facebook. We have over 9 million across mobile and desktop in the world.

JULIA BOORSTIN: How can you compete with Google when it comes to an ad network?

SHERYL SANDBERG: Our results are very strong. People who are using Facebook to reach-- to reach customers are finding that because we have real people and real engagement, the results compare favorably with basically anything else they do. Even our targeting. So if you take a narrow targeting for advertising, you know, women 18 to 28, the average online actual getting that right is about 35%. Our accuracy is 90%. So just there, that difference alone, is, you know, tremendously valuable in terms of making marketers get the bang for their buck that they need.

JULIA BOORSTIN: Has the new mobile app you launched in August boosted revenue?

SHERYL SANDBERG: The new mobile app is boosting engagement. And engagement always leads to revenue. We have the most engaged audience of mobile users anywhere. Importantly, our mobile users are more engaged than even our desktop users who are already the most engaged users anywhere in technology. If you're a mobile user, you're 20% more likely to come back to Facebook on a given day.

JULIA BOORSTIN: How do you balance the risk of overwhelming mobile users with ads and the-- the absolute need to start rolling out more mobile ads?

SHERYL SANDBERG: If ads are good and users like them, you really mitigate that risk. What we're doing is as we're rolling out ads into mobile, which we just rolled out this year, we're testing very carefully engagement on those ads, vis-à-vis engagement on other-- on other parts of the experience. And those tests are going very well. Importantly, we also see that our mobile ads are more engaging compared to the other ads we've had on the right-hand side. On average, a promoted pays post, if it goes through newsfeed, whether on desktop or mobile, is eight times more engaging than that exact same post on the right hand side. That's a big opportunity for us.

JULIA BOORSTIN: Wall Street also talks about Facebook as having a mobile problem. How else are you trying to make money from mobile?

SHERYL SANDBERG: Mobile's a huge opportunity for our company. It's also a platform shift and one we take very seriously. We are the number one-- mobile use-- usage in most every market on most every platform in the world. We're the number one free downloaded app on iOS and Android. A lot of companies have the problem that, you know, they don't know what to do with their ads in mobile. Because their ads are on the right-hand side on the desktop. And when you go to a mobile device and you cut off that right-hand side, you know, where does the ad go? Our most effective ads are now running through newsfeed. And that creates a very natural opportunity to have a native advertising experience on mobile. And it's something we've rolled out just this year, but is going really well.

SANDBERG ON NEW BUSINESS PLANS

SHERYL SANDBERG: As we increase our investment in monetization, we're thinking about premium services for businesses. We've heard from businesses, you know, all over the world that they want more from us. There are things they'd pay for they really want us to provide. So it's an area that we're currently starting to explore. We don't have a product announcement for you today, but it is something we're working on.

JULIA BOORSTIN: How big is the potential?

SHERYL SANDBERG: We think the potential on Facebook, you know, for almost anything is really big, because of our sheer size and scale and most importantly because of what users are doing and how engaged they are on the site.

JULIA BOORSTIN: So you have a lot of people's credit card numbers. Will we see a want button? Will we see more retail, more ecommerce?

SHERYL SANDBERG: We are working on lots of things. And I think you've saw last week-- the beginnings of-- of commerce on Facebook with our gift launch.

JULIA BOORSTIN: There's been a lot of talk about that want-- want button. Will we see one?

SHERYL SANDBERG: Well, right now, there is the ability to build all kinds of different open graph implementations. And there are people that are working on that.

JULIA BOORSTIN: Beyond advertising, Mark Zuckerberg has talked a lot about the potential in search. What's your plan for search?

SHERYL SANDBERG: So as Mark said, I think people are surprised by how much search is done on Facebook. You know, every day there's an enormous percentage of search. There's also been a promise in the market that search could become more social that we don't think has been met. You know, when you're looking for information, the question is who do you want it from? Do you want it from the wisdom of crowds or do you want it from the wisdom of friends? Our answer to the information that's most relevant for users is really about-- about friends. That if I'm looking for, you know, a restaurant to go to-- in New York this week, I'd rather get a recommendation from a friend. That's really what we're working on.

JULIA BOORSTIN: So could a Facebook social search compete with Google?

SHERYL SANDBERG: Not gonna comment on future product launches. We are working at making our products as usable and as accessible for everyone in the world.

SANDBERG ON SOCIAL AD SKEPTICISM

SHERYL SANDBERG: Facebook ads are incredibly effective. Not just at helping people remember ads and have brand affinity, which is really important on our platform, but more importantly at ringing the cash register. New platforms take a while to develop and they take a while to understand. So ours is a new platform. And I do think there's still skepticism out there. The good news is that with our clients and the people we're working with directly, they're increasingly convinced of the return we provide. In the last year, we've done over 60 studies looking at the impact Facebook ads have on ringing the cash register, either in online purchases or offline. And of those 60 studies, 70% showed a return on ad spend of three times or better and 49% showed a return on ad spends of five times or better.

JULIA BOORSTIN: Now I know it wasn't a financial hit, but General Motors deciding to pull its money out of Facebook ads dealt a big blow to your image. Are you still struggling with that image issue with Madison Avenue?

SHERYL SANDBERG: We're a new platform. And new platforms take time. They take time for people to adopt. And they take time for people to understand. The first thing people have to understand is that we're a different type of advertising-- of advertising opportunity. You know, the right ad on TV is not necessarily the right ad on Facebook. The right ad on Facebook invites people to really engage.

So a recent example, Gerber ran a promotion with us where they invited parents to take a picture of their own children and submit it for possible inclusion, you know, of one of the Gerber babies. And it's a great ad campaign. 'Cause, you know, I'm a mom. Everyone thinks their kid's cute enough to be on-- on-- be a Gerber baby.And what they saw was an ad-- return on ad spend of almost $4. Increasingly, as we're working with clients, we're able to show that return. And really this measurement, the measuring of offline sales is only something we've been doing this year. So it's very recent for us in the market.

JULIA BOORSTIN: And do you have any new ad products that you haven't announced yet?

SHERYL SANDBERG: So one of our new products, custom audiences, Fab.com has been using it, and enables them to target repeat customers rather than just the general public. Their conversion rates are up ten times using that product. That's just one of the many things we've rolled out in the last four months. So we feel very strongly that not only do we have a great opportunity ahead, but that we're already executing even more favorably against that opportunity.

SANDBERG ON PRIVACY

I think people do believe that we have an incentive to violate users trust to build our ad business. That's exactly wrong. We have every incentive to protect our users trust, so that we can build an advertising business that's very protective of the information they share. That's the whole business.

SANDBERG ON THE ECONOMY

You know, we focus on what we can control. And we can't control the state of the U.S. economy. And I do think-- you know, it's possible that the economy could go either way. I think we're in a tremendous period of uncertainty. Our job is to build a great business, whether that works in either direction. If the economy takes a downturn, which is obviously what most businesses worry about, we think that creates for marketers a flight to quality. When you have fewer dollars, you have to spend every one as effective-- as effectively as you can. And we think that creates a big opportunity for us. Because we believe we're one of the most effective place you can spend every dollar.

SANDBERG ON AD ENGAGEMENT

The right ad on Facebook invites people to really engage. So a recent example, Gerber ran a promotion with us where they invited parents to take a picture of their own children and submit it for possible inclusion, you know, of one of the Gerber babies. And it's a great ad campaign. 'Cause, you know, I'm a mom. Everyone thinks their kid's cute enough to be on-- on-- be a Gerber baby. But this really invited people to participate. And what they saw was an ad-- return on ad spend of almost $4. Increasingly, as we're working with clients, we're able to show that return. And really this measurement, the measuring of offline sales is only something we've been doing this year. So it's very recent for us in the market.

SANDBERG ON AD RETURN

In the last year, we've done over 60 studies looking at the impact Facebook ads have on ringing the cash register, either in online purchases or offline. And of those 60 studies, 70% showed a return on ad spend of three times or better and 49% showed a return on ad spends of five times or better.

SANDBERG ON WASHINGTON DC

JULIA BOORSTIN: There's been a lot of speculation that you're gonna return to Washington, D.C. Are you interested?

SHERYL SANDBERG: I really love my job at Facebook. I mean, I really think we do something that's super important, right? 950 million people, largest community anywhere on the world. I love what I'm doing and I plan to keep doing it.

SANDBERG ON FACEBOOK ATMOSPHERE

I think there is a lot of interest and speculation out there, "Oh my God, has everything blown up?" And the answer is really no. If you come to Facebook and you come to Facebook today for work, just as you did four months ago, I think we're a stronger company today than we were then.

SANDBERG ON CLOSE TO A BILLION USERS

JULIA BOORSTIN: You're close-- to one billion users. You're fast on the road to one billion users. What does that milestone mean for Facebook?

SHERYL SANDBERG: I think the one billion milestone-- when we hit it is a big deal. You know, we're the largest and most-engaged community of real people anywhere online. I think back to when Facebook started. And people thought it was literally absurd or-- unbelievable that they would ever put their real identity online. We have, you know, over 950 million real people, connected to real friends, sharing real things in their lives. And the fact that we could get to this scale and continue to grow is a really exciting milestone for the company.

SANDBERG ON FACEBOOK

JULIA BOORSTIN: How much time do you spend on Facebook every day?

SHERYL SANDBERG: A lot. Facebook's used a lot internally. We use our own product. Every product team has a Facebook group. We have lots of Facebook activity. It's part of how we run our company.

SANDBERG ON OVERSHARING

JULIA BOORSTIN: Does it scare you that you've helped create a generation of oversharers?

SHERYL SANDBERG: I think what we give is people the ability to share what they want. You know, what-- what is one person's, you know, ridiculous oversharing is another person's regular day. And we build technology that lets users share what they want to share. And that's tremendously, tremendously exciting. I don't pretend to judge what any individual does.

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