For the first time since Facebook’s IPO, COO Sheryl Sandberg sat down for an exclusive interview to talk about what’s happened since the social network went public, and where she’s taking the company next.
Facebook’s IPO Disaster & Stock Slide
With Facebook shares off some 40 percent since its May IPO, Sandberg had no choice but to address the company’s stock price. “We’re obviously disappointed and really surprised by what happened in the IPO,” Sandberg said. (Read more: The Man Behind Facebook's IPO Debacle)
She wouldn’t say whose fault the IPO was, saying that she is focused on things that she and the rest of the management team can control. “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.”
Sandberg acknowledged that the stock’s slide has not been great for employee morale, saying “obviously employees are disappointed that the stock price has gone down.” But she said that Facebook attracts employees who tend to be “mission focused,” so they’re continuing to focus on building social products.
In the wake of the IPO, Sandberg said Facebook has changed — it’s been “rolling out products pretty aggressively” and above all else, has started to really focus on monetization. “I think what we’ve done since the IPO is continue to really focus on building that business,” Sandberg says. “And I think we’re executing better and better.”
Sandberg on Facebook’s ‘Mobile Problem’
While Wall Street has hammered Facebook’s stock because of it’s “mobile problem” — it hasn’t been making money on its fast-growing mobile user base — Sandberg calls mobile “a huge opportunity.”
And Sandberg revealed that the new mobile app is “boosting engagement” more than the desktop service, saying that mobile users are 20 percent more likely to come back to Facebook on a given day. Sandberg revealed a key new stat: promoted posts, which are on the mobile app as well as the desktop, are eight times more engaging than the same post on the right side of Facebook’s website. Though mobile ads have just rolled out this year, she said they’re “going really well.”
Sandberg Addresses Social Ad Skepticism
Madison Avenue is skeptical about social ads, Sandberg said, attributing it to the fact that it’s still such a new platform, which “takes a while to understand.” And certainly General Motors pulling its advertising right before Facebook’s IPO dealt a blow to its image. But Sandberg emphasized repeatedly that Facebook ads are “incredibly effective.” She revealed that of the 60 studies Facebook has done over the past year on how its ads impact offline and online sales, 70 percent showed a return on ad spend of three times or better and 49 percent showed a return on ad spend of five times or better.
She also talked about Facebook testing an ad network, which would compete with the likes of Google. Can Facebook take on such a giant? Sandberg wouldn’t comment on Google specifically, just saying that Facebook has the ability to do very narrow targeting — 90 percent accuracy in reaching women 18 to 28, compared to an online average of 35 percent. “That difference alone is tremendously valuable in terms of making marketers get the bang for their buck that they need.”
Sandberg on Facebook’s New Business Opportunities
Though advertising is Facebook’s bread and butter, it’s looking for revenue opportunities in new areas.
For the first time, Sandberg pointed to the revenue potential in selling premium services for businesses—that could include the likes of analytics or customer service. “We’ve heard from businesses 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.”
On the heels of Facebook announcing a test of "Gifts" with 1 percent of its user base, its first move into e-commerce, Sandberg said the potential is “really big,” because wishing people "happy birthday" is such a big thing on Facebook. “So we think gifting is a natural extension of what we’re doing.” (Read More:Facebook Moves Into E-Commerce, Tests Facebook Gifts)
Will we see a “want” button? Sandberg wouldn’t comment specifically, just saying “there is the ability to build all kinds of different open graph implementations and there are people working on that.” (Read more:Facebook Could Bounce on 'Want' Button: Munster)
She followed on Mark Zuckerberg’s comments on the potential in search, saying Facebook is “working on it.” “There’s been a promise in the market that search could become more social that we don’t think has been met. 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 friends.”
Sandberg on Privacy
With privacy concerns escalating as Facebook gathers more information about its users for advertising purposes, Sandberg said, “Privacy and trust is a cornerstone of our business.”
She tried to dispel some negative impressions: “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
Sandberg dismissed rumors that she might return to Washington D.C. to become Treasury Secretary. But she did weigh in on the economy, saying “It’s possible that the economy could go either way. I think we’re in a tremendous period of uncertainty.” But if the economy goes south, she said Facebook could benefit from a flight to quality. She said the "fiscal cliff," when the Bush-era tax cuts expire and automatic spending cuts kick in, is “obviously a concern that’s shared broadly in the economy. And everyone in business worries about how it’s going to impact them.”
—By CNBC's Julia Boorstin
Questions? Comments? MediaMoney@cnbc.com