INSUBCONTINENT EXCLUSIVE:
The News Feed won&t sustain Facebook forever, and that scaring investors
Today on Facebook earnings call, Mark Zuckerberg stressed that sharing is shifting to private chat, where people send 100 billion messages
per day on Facebook family of apps, and Stories, where he says people share 1 billion of these slideshows per day (though it 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 comments was a reversal of Facebook&sinitial 2 percent share price gain after earnings were announced that dragged
it down to a 3.5 percent loss
That was only reversed when Zuckerberg said Facebook would reduce limits on video advertising, pushing shares up 3 percentin after-hours
Facebook 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
Zuckerberg admits it hitting saturation in developed markets, plus it running out of News Feed space
Now it will both have to deal with the sharing medium shift, and that the new users it adding in the Asia-Pacific and Rest Of World regions
earn it 10X less than users in North America.
Facebook shares climb despite Q3 user growth and revenue
Battling iMessage
In messaging,
Zuckerberg says &People share more photos, videos, and links on WhatsApp and Messenger than they do on social networks.&He sees Facebook
position as strong, saying &We&re leading in most countries&, though that mostly in the developing world Android market where people choose
their own default messaging app
&Our biggest competitor by far is iMessage
In important countries like the US where the iPhone is strong, Apple bundles iMesssage as the default texting app, and it still ahead&
Zuckerberg notes.
The &bundled& language harkens back to to antitrust lawsuits against Microsoft for bundling computers with Internet
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.
Dominating
Snapchat
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, and Facebook Stories are gaining momentum after a slow and buggy
That why Zuckerberg never mentioned Snapchat, and instead talk about YouTube as its primary competitor in video.
The problem is that
creating attractive video ads, especially vertical full-screen ones for Stories, is beyond the capability of the long-tail on small
businesses that have fueled Facebook News Feed ad revenue
Users often rapidly skip through Stories ads, and Facebook currently doesn&t offer unskippable ones like Snapchat
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.
Chasing YouTube
Beyond Stories, Facebook salvaged its after-hours share price by discussing how it
plans to show more video, and therefore more of its lucrative video ads
Back in January, Facebook admitted its Q4 user count had declined and revenue might stumble in part because it had decided to show people
fewer viral videos that they watch passively
This came as part of its drive for Time Well Spent
But now, Zuckerberg says that Facebook has cracked the code for how to make passive video consumption a positive experience, so Facebook
will lift some limits:
&People really want to watch a lot of video
To a large degree we&ve had to rate limit its growth, and we need to do the things so we can stop limiting it
The things that have caused us to limit it are on the one hand, when we see passive consumption of video displacing social interactions
.We needed to figure out a way that video can grow but people can also keep on interacting and doing what they tell us that they uniquely
And now I think we&re starting to work through what the formula is going to be so we can take some of those rate limits off and let video
grow at the rate that it wants to
I feel that that a very exciting opportunity ahead.&
Across Facebook 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 sponsored messages and Stories ads that will define whether Facebook revenue
