Facebook

17
Dec
2020
Catch me on this week’s episode of The Prof G Show

Catch me on this week’s episode of The Prof G Show

I appeared on this week’s episode of Scott Galloway’s The Prof G Show with an Office Hours question about Facebook’s antitrust challenges:

With all this antitrust pressure facing Facebook at the moment, do you think there’s any chance that – if they are forced to divest one or more of their assets – Mark Zuckerberg could choose to get rid of Facebook, the ‘Big Blue app’ itself, rather than, for example, Instagram?

Some estimates say that, by next year, Instagram could account for up to 40% of the parent company’s advertising revenue, and this has been increasing significantly every year since Instagram started really generating revenue back in 2015. And with some other beefed-up revenue-generating features like shopping also gaining traction on Instagram lately, it’s maybe not crazy to think that, in the next couple of years, Instagram could end up bringing in more “cabbage” than Facebook itself. With all the controversy around fake news and content moderation on the Facebook platform, it might be starting to seem like more trouble than it’s worth.

So, what do you think – could Mark Zuckerberg ever give up his baby for a potentially greater shot at better future revenue?

Check it out at about the 45:35 mark below to see what Scott had to say.

As a follow-up, I posed the same question to long-time Facebook observer, WIRED Editor at Large, and author of ‘Facebook: An Inside Story‘, Steven Levy, and this is what he had to say.

Posted by Rob in Facebook
09
Jul
2019
What Facebook’s Privacy Pivot & Cryptocurrency Might Mean For Your Business

What Facebook’s Privacy Pivot & Cryptocurrency Might Mean For Your Business

I wrote this article for the July 5th 2019 issue of Khaleej Times newspaper

Facebook has had a pretty tough couple of years. Maybe not from a money-making point of view (revenue is continuing to rise, albeit at a slower speed), but certainly in the court of public opinion. From the Cambridge Analytica user privacy scandal last April, to a data breach in September that affected 50 million accounts, as well as ongoing struggles with moderating hate speech and graphic content, the company has taken a battering in the media.

Despite this controversy, Facebook is still the largest social network in the world. It’s 2.4 Billion monthly active users make up almost a third of the global population. But while the amount of users is still slowly increasing according to Facebook’s own statistics, actions such as likes, shares and posts in the News Feed have plummeted over the last year. Such a decline in engagement is a worrying thought for the company. The News Feed has traditionally been where most of the action on Facebook happens, and subsequently where it makes most of its revenue from ads.

As more and more social media usage moves away from public sharing towards private messaging, the company knows that it can’t rely on the News Feed for continued growth. It acknowledged as much back in March when Mark Zuckerberg announced that Facebook was pivoting away from relying on public posts in the News Feed for engagement, and focusing more towards person-to-person and group messaging. In it’s grand vision, the company wants to link and encrypt all three of its messaging platforms; Facebook Messenger, WhatsApp and Instagram, and offer a more broad range of private services to this total user base of almost 4 Billion accounts. But with a slow death of the News Feed, which has traditionally been the primary home for ads, how might this affect how brands use the platform to communicate and interact with their customers?

Ads within messages

When it comes to simply serving ads, the Messenger app has been running ads in a limited capacity for a couple of years, but in a clunky and invasive way. These ads appear within the feed of messages but look and feel just like News Feed ads, albeit without the context of the feed or the intent of a search results page. While WhatsApp and Instagram have avoided this type of ad so far, Facebook would be wise to keep it this way. Cramming ads in between users’ messages with friends and family is not likely to go down well, and this could risk driving users away.

Ads within Stories

While the News Feed is being put out to pasture, the Stories format of ephemeral vertical content is alive and well, and has become a core element of the big messaging apps. Facebook Chief Product Officer, Chris Cox has predicted that Stories will surpass feed posts as the top way to share sometime this year. As user attention moves to Stories, ads are following, and this will remain an increasingly attractive place for brands to advertise on messaging apps in the future. Ads in WhatsApp’s Stories product, ‘Status’, will be rolling out in 2020, hoping to emulate the success of ads in Stories on Instagram.

Messaging services

Aside from simply serving ads, the most interesting possibilities lie in the messaging services that are expected to be launched on this integrated network of messaging apps. In a blog post announcing the move, Mark Zuckerberg suggested that private, encrypted messaging will facilitate new business tools involving payments and commerce, which will ultimately create a platform for many other kinds of private services. What exactly these services might be remains to be seen, but we can get a glimpse of the possibilities by looking East to gigantic messaging apps like China’s WeChat.

In addition to simply messaging, WeChat facilitates a huge range of services that allow users to shop, play games, pay utility bills and order taxis or meal deliveries all from within the app. Think of all the types of services that users currently book or manage via their smartphone: buying tickets to a show, arranging a car servicing, scheduling a maid. Expect these soon to be facilitated through Facebook’s network of messaging apps, with the company taking a cut of each transaction along the way. Facebook ultimately wants its messaging platform to be a one-stop-shop for any functional utility a user might want to use their smartphone to manage.

In a related strategic move, the company has also just announced the launch of a cryptocurrency, called Libra, that will enable payments on its platform and across the web. A digital wallet will live inside its apps allowing users to easily use Libra to send money to friends and businesses anywhere in the world, with almost zero fees. This move is a strong indicator of Facebook’s intent to become a transactional platform, rather than relying on advertising for its revenue. If the plan works, WhatsApp and Messenger are well-placed to become new payments and commerce hubs.

Facebook has already exhibited great foresight in anticipating this trend towards messaging. In 2014, it removed the messaging feature from its main app and forced users to download the standalone Messenger app if they wanted to use the service on mobile. Shortly afterwards, the company purchased WhatsApp for a staggering $19 Billion. The company is clearly aware of how important messaging will be going forward and, while Facebook as we know it might soon be a thing of the past, with change comes opportunity. But as messaging is more of a private space than an environment dedicated to public sharing, businesses must tread carefully so as not to abuse this relationship.

Posted by Rob in Facebook, Social Media, WhatsApp
13
Jan
2019
The Year Ahead For… Social Media

The Year Ahead For… Social Media

This article was originally featured in the Predictions 2019 issue of Campaign Middle East magazine on 13th Jan 2019.

It’s that time of year again, and while it’s usually a bit of a folly to try and predict the cycle of  broad consumer trends based on the layout of the Gregorian calendar, it doesn’t hurt to look at how some trends might continue to evolve over the coming months. While many yearly predictions can end up turning into a game of buzzword bingo (I’m looking at you Blockchain, AI, AR etc.), instead, the below focuses more on what the average user might experience on social media moving into 2019, and thus what advertisers should take note of. This is not an exhaustive list for sure, but it might help you make sense of the social media landscape over the coming months.

STORIES, STORIES EVERYWHERE

In the not-too-distant past, the News Feed was the centre of all life on social media, but in the last two years, much of this usage has shifted to Stories. People just can’t get enough of the ephemeral vertical video format. The incredible popularity of Stories has been one of the most noticeable trends in social media over the last 12 months, with every platform seemingly adopting the format. Today, more than 1.2 billion users around the world share Stories each day across Instagram (400m+), Facebook / Messenger (300m+), WhatsApp (450m+) and Snapchat (150m+). Facebook’s chief product officer Chris Cox has predicted that, in 2019, Stories will surpass feed posts as the top way to share on its channels.

At the same time, other platforms like YouTube, Netflix and even LinkedIn have introduced Stories-style video over the last few months and will undoubtedly aim to utilize this format in the coming year. With this in mind, expect to see vertical video continue to become even more ubiquitous across the board, giving advertisers more of an incentive to create custom creative for the format rather than just adapting current assets.

AD OVERLOAD

Ironically, despite the recent growth in popularity of Stories, advertisers have been slow to fully embrace the format. Expect this to change in 2019. With the feed having been saturated with ads for some years now, the Stories feature is prime real-estate for growth, so expect to see more and more ads there in 2019. While revenue and user growth is slowing on Facebook, Instagram is booming. As such, expect to see an even bigger push for ads on Instagram as Facebook looks to offset this slowing ad growth. The Instagram feed will inevitably continue to become even more clogged with ads, while advertising will also start rolling out on WhatsApp too. As these platforms struggle to meet revenue targets, the once-sacred ideal of user experience will continue taking a back seat to cold hard cash.

With more and more ads getting in the way of regular content, and users becoming more aware of, and resistant to, the concept of targeted advertising, at what point will they start pushing back? Ad blockers are becoming an ever-popular way of dodging this onslaught, and brands must tread carefully so as not to alienate their audience.

INFLUENCER MARKETING MATURES

With it becoming ever harder to make an impact on users with traditional digital ads, brands are looking for more left-field ways of spending their budget on social media. Influencer marketing might have been considered a gimmicky and somewhat contentious approach in some circles up until recently, but this is an area that is maturing each year. With new regulation being introduced in the UAE in 2018, brands can be more confident that their budget is being spent legitimately. But with more money at stake, it’s increasingly important to choose creators that are a good fit with your brand, and to carefully consider what type of content you want them to create for you.

There is a huge opportunity for creating impactful content via influencers, but brands must be willing to budget accordingly. As the old saying goes, you get what you pay for. Social media marketing in general was initially seen as a fluffy channel where marketers could get free distribution until organic reach evaporated in 2014. Since then, marketers have been forced to re-evaluate this belief and consider it as they would any other paid channel; one that requires a dedicated budget and a well thought-out strategy. The same is now true for influencer marketing.

CLEANING OUT THE CLOSET

2018 was a watershed year for social media as most platforms faced increasing pressure from both users and the media over how they regulate content and manage user data. This will likely intensify in 2019. From concerns over user privacy and ‘fake news’ on Facebook, to trolling on Twitter and bot accounts on Instagram, many users are getting fed-up and these platforms are aware of the threat that this could pose to their sustainability in the long run. As users become more knowledgeable about how digital platforms make money from their presence, the platforms are being held to a higher standard and pressured into becoming more transparent. Expect to see more moves to appease these concerns over the coming months.

Posted by Rob in Advertising, Campaign Magazine, Facebook, Links of the Week, Social Media
21
Oct
2018
What next for Instagram?

What next for Instagram?

With Instagram’s co-founders both quitting Facebook, are we about to see a more aggressive pursuit of ad dollars on the platform?

Originally featured in the October 21st 2018 issue of Campaign Middle East magazine

Seemingly out of the blue on Monday, September 24, Instagram’s two co-founders Kevin Systrom and Mike Krieger, who had both remained with the company since being acquired by Facebook in 2012, both abruptly resigned from the social media giant. The reason seems to be that Mark Zuckerberg had become overbearing in his control of the company, wanting to take the app in a direction that the founders disagreed with.

While this is a bombshell in-and-of itself, the fact that it comes hot on the heels of the two WhatsApp co-founders, Jan Koum and Brian Acton also quitting Facebook back in April for similar reasons, points to a broader movement. Despite Zuckerberg being traditionally quite facilitating to the founders of the companies that have been acquired by Facebook over the years, it seems that he is gradually starting to exert his influence and take a more active role in the business side of things with these companies.

So what has changed?

While Instagram initially relied on Facebook to help launch and scale its advertising offering, now it is Facebook that relies on Instagram for future growth. While revenue and user growth on Facebook is flagging, Instagram is booming. In the latest earnings call in July, the company forecast a continued slowdown in revenue growth and a slimming of profit margins, but disclosed that the growing number of ads on Instagram is an increasingly significant contributor to Facebook’s overall revenue. They also emphasised an intent to secure more ad dollars from Instagram going forward. It is this fixation on perpetual growth that is worrying for Instagram users. As Instagram becomes more-and-more important to Facebook’s bottom line, there is a continued risk that we will see the platform being overly commercialised.

Users have been drifting away from Facebook recently, not just because of ‘fake news’ or privacy breaches, but also because much of the recent growth in ad revenue has come from smaller companies that have clogged the Newsfeed with spammier content. While early corporate advertisers tend to be big brands or smart startups with relatively high quality ads, over time that quality tends to dip. As a platform matures, there is a clear trade-off between making it more accessible to smaller advertisers, and maintaining the quality of ads, a compromise that can affect the aesthetics of the platform in general.

The worry for Instagram is that something similar could happen to it too, and that this could be more strongly felt as lower quality ads could jolt the user out of the polished, picture perfect world of the Instagram feed. We are already starting to see this in effect in Dubai, with ads for massage parlours and furniture-moving companies that look like they were created by an eight-year old on Microsoft Paint. Not to mention the raft of wannabe influencers that pay to promote their own posts in a bid to grow their following, and subsequently, their ‘influence’.

Interestingly, the Stories format is relatively untapped from a monetisation point of view so far. In fact, Facebook has attributed some of the company’s slowing revenue growth to increased Instagram Stories usage. That is, more and more users are watching Stories at the expense of scrolling through the feed. But you can be sure that Facebook are eyeing this up as prime real estate for growth, and have recently launched an initiative to encourage SMEs to run ads there. Expect to see your local dog walker or handy man popping-up in an Instagram Stories ad in the not-too-distant future.

Ultimately, an increase in ads combined with a reduction in the quality of these ads affects the user experience and the overall quality of the platform. If Instagram too becomes chock-full of trashy ads, the people that moved from Facebook to Instagram to get away from the bombardment might just move on to somewhere else again in time. Generally speaking, this has been one of the more successful acquisitions in tech history, with Facebook playing it excellently so far, waiting for just the right moment to introduce ads to Instagram. It’s only been three years since Instagram opened up their self-service ad platform to a broader market in September 2015. While this certainly is not a long time in the grand scheme of things, they still have to play it carefully or risk turning Instagram into an inhospitable wasteland.

Posted by Rob in Advertising, Campaign Magazine, Facebook, Mobile, Snapchat
12
Aug
2018
Trading Places

Trading Places

Originally featured in the August 12th 2018 issue of Campaign Middle East magazine

Facebook might be the undisputed king of social media when it comes to the scale of it’s digital advertising machine, but for how long? It’s a well worn trope over the last few years that younger users are eschewing the platform in favour of photo and messaging apps like Instagram and Snapchat, but more concrete evidence of this continues to come to the surface.

A Pew Research Centre survey released earlier this Summer has shone some more light on this trend with a study on the social media habits of users between the ages of 13 and 17 in the US. In 2018, the most popular social media platform for this group is Instagram with 72% of users claiming to use it. Snapchat was close behind at 69%. Further down the field was Facebook with just over half of this group (51%) claiming to use it, and only 10% admitting to it being their most-used platform. This is in stark contrast to the results from a corresponding study in 2015. Since then, Facebook and Instagram have almost perfectly switched places; Facebook down from 71% to 51%, and Instagram up from 52% to 72%. Quite a staggering role reversal in just three years.

Mark Zuckerberg last year announced a shift in focus from ‘passive consumption’ of news and media to ‘meaningful interactions’ between friends and family. But it seems that Facebook is losing ground on both fronts: YouTube being preferred for passive consumption, Instagram and Snapchat for social interaction and self-expression. The Facebook News Feed, and it’s focus on a never ending cycle of ‘news’, seems to be a diminishing pull for younger users, and they are voting with their feet, more interested in pictures of their friends’ lunch and pets.

Teens leaving Facebook en masse is indicative of a wider trend. Over the last couple of years, the company has had to battle with scandals involving ‘fake news’ and privacy breaches, and it seems that many users have used this as an excuse (or an opportunity) to leave the network. In Europe alone, 3 million daily active users have left in just the last quarter (likely as a result of the implementation of GDPR), while daily users in the US have remained flat. In the Middle East in particular, Facebook usage declined by 20 percentage points between 2013 and 2017 according to research conducted by the Northwestern University in Qatar (94% in 2013 down to 74% in 2017) with the UAE, KSA and Qatar accounting for the biggest declines. In the grand scheme of things, this is just a drop in the ocean, but as new user sign-ups slow down (monthly active user growth is down from 13 per cent to 11 per cent year-on-year), users that visit the platform less, or even leave it altogether, will be more strongly felt. Meanwhile, Instagram’s user numbers continue to skyrocket, doubling from 500 million MAUs to 1 billion in the last two years.

Where eyeballs go, ad dollars eventually follow. Facebook’s stock price plummeted by over 20% in one day last month following a weak earnings announcement, the largest one-day loss in market value by any company in US stock market history. Not because of a fall in revenue (ad revenue was up 42 per cent year-on-year), but simply because this growth had slowed (down from 49 per cent). Facebook’s Chief Financial Officer, David Wehner, said that revenue growth would likely continue to decline for the rest of the year, partly because Facebook is planning to give users more options with their privacy settings, including letting them limit the kinds of ads they see.

Enter Instagram to save the day. In 2012, Facebook paid $1 billion to acquire the photo-sharing app, a price that many people balked at at the time. While Facebook doesn’t break out revenue from Instagram individually, data marketing technology company 4C estimated a 204 per cent growth in Instagram ad spend year-on-year during the last quarter, and the unit is expected to generate $8.06 billion in revenue in 2018 according to research firm eMarketer. By 2020, Instagram could contribute $20 billion to Facebook’s revenue according to some analysts, accounting for roughly a quarter of total revenue. In hindsight, it looks like that was $1 billion very well spent.

Posted by Rob in Campaign Magazine, Facebook