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The News Feed won’t sustain Facebook forever, and that’s scaring investors. Today on Facebook’s earnings call, Mark Zuckerberg stressed that sharing is shifting to private chat, where people send 100 billion messages per day on Facebook’s family of apps, and Stories, where he says people share 1 billion of these slideshows per day (though it’s unclear if that includes third-party apps like Snapchat).
But that means Facebook will have to realign its business towards these mediums where monetization is more complex and it has less experience. The result of Zuckerberg’s comments was a reversal of Facebook’s initial 2 percent share price gain after earnings were announced, dragging it down to a 3.5 percent loss in after-hours trading. That was only reversed when Zuckerberg said Facebook would reduce limits on video advertising.
Facebook’s year-over-year revenue growth has already slowed from 59 percent in Q3 2016, to 49 percent a year ago, to 33 percent now as it hits saturation in developed markets and runs out of News Feed space. Now it will both have to deal with the sharing medium shift, and that the new users it’s adding in the Asia-Pacific and Rest Of World regions earn it 10X less than users in North America.
In messaging, Zuckerberg says more photos and links are shared privately than through Feeds. He sees Facebook’s position as strong, saying “we’re leading in most countries” due to the success of WhatsApp and people’s love of its end-to-end encrypted privacy. But that’s mostly in the developing world Android market where people choose their own default messaging app. In the US and other developed nations where iPhones are popular and ared “bundled” with iMessage, Zuckerberg says Apple “is still ahead”.
The “bundled” language harkens back to to antitrust lawsuits against Microsoft for bundling computers with Internet Explorer. With Apple CEO Tim Cook constantly harping on the poor privacy practices of ad-supported companies like Facebook, Zuckerberg might be gunning to draw regulator attention to iMessage.
Facebook is starting to more aggressively monetize Messenger through inbox ads, and its now selling enterprise tools to brands on both Facebook and WhatsApp that let them pay to ping users. But Facebook risks its chat apps seeming annoying or intrusive if it packs in too many ads or allows too much Message spam. Users could stray to status quos like iMessage and Android Messages if it puts monetization above the user experience.
On Stories, Zuckerberg says Facebook is doing even better. Over 1 billion people use its Stories features across Facebook, Messenger, Instagram, and WhatsApp each day, compared to 186 million daily users on Stories inventor Snapchat as a whole. Stories are where the majority of Facebook sharing growth is happening.
The problem is that creating attractive full-screen video ads is beyond the capability of the long-tail on small businesses that have fueled Facebook’s News Feed ad revenue. Users often rapidly skip through these ads, and Facebook currently doesn’t offer unskippable Stories ads like Snapchat. And many people don’t think to tap or swipe up to visit a link from a Story, or simply don’t want to lose their place in ways that didn’t happen on desktop or even mobile feed ads.
Across Facebook’s other products, Zuckerberg noted that 800 million people now use Marketplace, its Jobs feature have helped people find 1 million jobs, and its birthday fundraisers have raised $300 million alone this year. But it will be teaching advertisers how to effectively create message and Stories ads that will define whether Facebook’s revenue keeps growing.
from www.tech-life.in
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