Facebook chief executive Mark Zuckerberg has said it will create “a lot of value” from search over the next few years, signalling that the company is starting to feel strong enough about its own search offering.
Zuckerberg made the statement during the company’s fourth quarter earnings call yesterday evening (29 January) and added it would “admit time to build really valuable products”.
“We’re optimistic about our ability to deliver value that only Facebook is able to provide,” he said.
The business is beginning to build out search tools to comb the trillions of posts for search it has indexed, making it easier for users to trawl through its network for specific content – both branded and user-generated. While the billion requests it process a day is a respectable amount, Zuckerberg admitted that it was not that big in comparison to what it could be. Consequently, the current scale does not make it a strong enough advertising proposition.
Facebook eyes more meaningful search activity
“Search at Facebook is another important effort that we expect to create a lot of value over the next few years,” said Zuckerberg. “We’re on this multiyear voyage to basically index all the content and make it available to people and rank it well. We started off by launching graph search which I think included more than a trillion different connections in the first system.
“We’re seeing that people immediately understand how they can use this and find content that they've seen in news feed before or that they’ve posted with just a few keywords. And we’re excited about that, but there is a lot more to do. So that we’re not really thinking about advertising in it yet on the scale that our community operates, a billion searches per day is actually not that big compared to what we think the opportunity here should be.”
Facebook signalled a search charge was on the cards when it dropped Bing results from its Graph Search too last month. Industry analysts observed at the time that a more robust search offering from Facebook was imminent as it looks for new ways to increase dwell time, resulting in greater monetisation. It breathes new life into rumours that the business is plotting its own search engine capable of covering the entire web rather than just its own social network.
Search could become key to the company’s efforts to offset an anticipated slowdown of its mobile offering. Mobile now accounts for 69 per cent of its revenue with 1.19 billion users out of 1.39 logging into the device once a month from a mobile device. It clarifies the rapid rise of Facebook’s mobile offering since it launched in 2012, all the while highlighting the unlikelihood of growth getting faster as it gets continues to swell.
Facebook’s mobile video momentum
The business is looking to video to pull new revenues from the fast maturing channel. Facebook chief operating officer Sheryl Sandberg told analysts on the same call that it was still in the early phases of monetising video traffic, which jumped 75 per cent worldwide in 2014. One key growth area could be premium video produced by users similar to YouTube's model.
Sandberg said: "On premium video content, we haven’t figured out exactly how important this is to the ecosystem or how much we are going to invest or what kind of monetisation we are going to offer.
“Because it provides the kind of sharing people want, people come to Facebook to share with their friends and family but they also come to Facebook to connect with everyone from politicians to journalist to celebrities they want to connect with and get news and we are definitely seeing public content grow as a percentage of what people get. We also had some nice wins with the Golden Globes this year and there are other things we are doing to get people doing some partnerships.We did one with CNBC to show how we can help content creators increased their distribution and reach people directly on Facebook."
The upcoming investments place Facebook as a “critical business partner” to advertisers, that is able to clearly demonstrate the effect personalised content at scale has on commercial metrics, according to Sandberg. Advertisers are buying into the claim off the back of the company’s investments but there are still concerns about viewability on the channel, especially now that it is harder to reach fans with organic content.
Rebecca Mahony, chief marketing officer at video ad company Teads, said: “Facebook’s results show online video advertising is the new driving force behind the social network. The acquisition of LiveRail last year showed Facebook is serious about putting video advertising at the centre of its business model and we can expect more investment in this area. Analysts predict video advertising could add $700m - $1bn to Facebook’s 2015 revenue.
“But Facebook cannot continue to grow at this pace without addressing the growing concerns of advertisers and brands. The biggest issue currently facing the industry is viewability as brands pay for ads that are not viewed. Facebook charges for adverts that have only been ‘viewed’ for three seconds and whilst this complies with international regulations, this simply does not go far enough. Brands are increasingly demanding –quite rightly – that they only pay for 100 per cent viewable ad campaigns.”
The concern comes as the social network explores ways of hosting more content from media owners on its platform. It is working with publishers such as the Financial Times and the Guardian on how they can better monetise their fans.