Facebook has earmarked its ephemeral Stories offering and private messaging as its biggest user growth drivers. So, it’s developing tools to help advertisers boost their revenue prospects from these newer formats.
In its third-quarter earnings report, the company revealed that user growth has continued to slow to an increase of only 9% year-on-year, which translates to 1.49 billion daily active users. However, it estimated that more than 2 billion people use at least one of its services (Facebook, WhatsApp, Instagram, and Messenger) every day on average.
“All of the Stories trends suggest that in the not too distant future people will be sharing more into Stories than they will into feeds,” said Mark Zuckerberg, Facebook’s founder and chief executive. “This happened very quickly; this whole trend is much newer than the trend with Newsfeed and continues to grow very quickly.”
He admitted that this community growth in the newer platforms is “outpacing the progress we’ve made so far on developing the ads in that space.” But he also stated that the eventual opportunity for advertisers will be bigger in the Stories space, due to the volume of content that the format provides.
He did not provide a time frame when Stories revenue will converge with that of Newsfeed, however.
Sheryl Sandberg, Facebook’s chief operating officer, said the company’s mission is now to “close the gap” between users’ appetite for Stories — as well as “messaging, Marketplace, and Watch” — and advertisers’ ability to access those platforms.
“We know it’s not enough to make a new format available; we also need to make it easy for advertisers to optimize their campaigns,” she said, explaining that Facebook has been developing a tool to convert horizontal Newsfeed ads into vertical Stories ads. This eliminates the need for two lots of creative to satisfy the separate platforms.
Pandora is one of the first brands to use this function. Sandberg said the company saw its cost per view drop by 10% as a result.
Facebook is exploring options around sponsored messages and inbox ads on the newly redesigned Messenger; however, Sandberg noted these developments are still in their infancy.
Plans for WhatsApp, which has remained free from advertising so far, are tamer — although the launch of the WhatsApp Business API in August now allows larger companies to send useful information such as boarding passes and order confirmations.
“This paid messaging model will ensure companies are selective about what they send,” said Sandberg. “As always, people will be able to block any business they want with one tap.
“As we build a business on WhatsApp, we’re determined to maintain the simple, private user experience that people love.”
Zuckerberg also highlighted Instagram Explore as a forthcoming opportunity for advertisers.
He added that Facebook’s parent platform will be rolling out its much-anticipated Dating tool across the world “soon,” as part of its strategy to shift focus from friends and family and into “communities.” Its Fundraisers, Jobs, and Marketplace offerings also fall under this approach.
Conversely, the company is moving away from the notion of communities on Instagram and instead developing the platform with “interests” in mind via products such as Shopping and IGTV.
Facebook reported third-quarter revenue at $13.73bn, up 33% year-on-year.