Facebook’s digital advertising potential touted on Madison Avenue

Facebook Chief Operating Officer Sheryl Sandberg and board member Marc Andreessen took their own marketing message to Madison Avenue on Tuesday, joining forces to tell advertisers that despite its disastrous debut as a public company, Facebook is the future of digital advertising.

Sandberg conceded Facebook was “obviously surprised and disappointed” by the initial public stock offering in May that failed to live up to its gravity-defying hype. And she acknowledged Facebook had made mistakes, especially when it comes to its mobile strategy, echoing comments that Facebook Chief Executive Mark Zuckerberg made last month about the failure of Facebook’s HTML5 efforts.

But, she said, “we want to make sure our plans are big, bold and risk taking enough.”

“You want these companies taking risks,” Andreessen said during an onstage conversation with Charlie Rose at New York’s IAB conference. “When tech companies start being conservative, that’s when they go completely sideways.”

Andreessen says morale remains high at Facebook. He attended a recent all-hands meeting at which Zuckerberg received a standing ovation.

“People think ‘Oh my God, all of Facebook must be in tatters,’” Sandberg said. “Certainly people were disappointed. But Silicon Valley companies, we cycle quickly.… We are pretty good at moving forward.”

She says the IPO has not hindered the business or innovation despite the dramatic loss in market value.

“We are really happy with the progress we are making,” Sandberg said.

Facebook is “very focused” on getting ads into users’ news feeds that give marketers a “great return,” she said.

Asked if making money is more challenging than she expected, she responded: “It’s an evolution.”

The social networking giant is facing intense pressure from investors to ramp up its advertising business, which generated $3.7 billion last year. Sandberg said mobile ads in particular are performing well. She also pushed back against criticism that Facebook invades its users’ privacy.

“We don’t give your information to marketers. We do provide a way for marketers to target information to the right people,” she said.

“Every new technology brings fears, and a lot of those fears are around the invasion of privacy,” Sandberg continued. “We are a new technology. We have the responsibility to explain our privacy practices.”

Facebook has once again found itself in the cross hairs of privacy advocates. In August, Facebook said it was working with data-mining company Datalogix to track whether users who saw ads on Facebook bought more products in retail stores. The tests showed that in 70% of the cases, $1 spent on Facebook led to $3 in sales.

The Electronic Privacy Information Center last week filed a complaint with the Federal Trade Commission over Facebook’s relationship with Datalogix, saying it violates a settlement reached with regulators that requires the social network to disclose and get consent from users before sharing information with a third party.

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Follow Jessica Guynn on Twitter @jguynn