The most important thing to know about Facebook’s ad load problem

For almost a year, Facebook has warned that sometime in the middle of 2017 the social network will max out the number of ads it can squeeze in peopleas news feeds. As a result of hitting that ad load ceiling, Facebookas ad revenue growth will slow down “meaningfully” A in the second half of 2017, told CFO David Wehner during the companyas Q1 2017 earnings call on Wednesday.

But thereas a but.

When Wehner talks about ad load, he is only referring to the ad load in Facebookas news feed, a Facebook spokesperson corroborated after Wednesdayas earnings call that was once again dominated by ad load topics. That distinction is important because it means that Facebookas ad load problem may not be much of a problem for long.

Facebook may be running out of room for ads in peopleas news feeds, but itas starting to set ads in so many other places that ad load on Facebook may be stagnating, but ad load across Facebook Inc. is just beginning to rampA up.

For example, the number of ad impressions that Facebook served in Q1 only increased by 32 percentage year-over-year. Thatas a slowdown compared to the four preceding one-quarters when the number was up by either 49 or 50 percentage year-over-year. The reason for the deceleration? aOur decision to rank longer-form video higher in news feed, a told Wehner. aThat entails more time in video and that does come at the expense of some impression growth in news feed.a

Thatas weird, right? Facebook is pushing people to do something that stimulates Facebook lose out on money. Except that Facebook is betting eventually it will make back that money and then some. It is conditioning people to watch longer videos on Facebook. And it just so happens that those longer videos are the ones that Facebook is starting to insert mid-roll ads, or aad breaches, a within. Those ad breaches could wind up fetching more money per ad for Facebook than the news feed ads currently going unseen, which might mean that Facebook could eventually even reduce the number of standard news feed ads toA avoid feeling like Fox-era MySpace.

Ad breaches are merely the latest example of what Facebook has been doing for years to reduce the pressure to up the ratio of ads to organic posts in peopleas feeds in order to up its ad revenue. A few years ago it started diverting ads out to other publishersa properties through its Audience Network ad network. Then it started sending them to Instagram. Then to Facebook Groups.

Instagram Narrative, Messenger not included

At the same time as Facebook has ramped up ways to redirect ads from the news feed, it is also rolling out new ad slots, like within Instagramas Stories feed thatas used by more than 200 million people every day. Ads in Instagram Stories aare not in the ad load calculation, per se. It is different from the ad load commentary that Iave given, a Wehner said on Wednesday.

Also not included in the ad load calculation: ads within Facebook Messenger. Like ads in Facebookas videos and Instagramas Stories, Messenger had recently started seeding ads in peopleas inboxes. But itas spent the last couple years conditioning people to become accustomed to hearing from marketers on Messenger. In 2015 Facebook redesigned Pages on mobile to make it easier for people to connect with a business through Messenger. Then in 2016 it opened Messenger to bots so that businesses could automate their conversations with customers. And in 2017 it is making it easier for the 1.2 billion people that use Messenger every month to find businesses within Messenger.

aThe top priority right now is just building up the base of organic interactions between people and businesses that they want to interact with. And once we get that to a big base, I think there are going to be a lot of opportunities to build a business, a told Facebook CEO Mark Zuckerberg on Wednesdayas call.

Something similar could be said for other new Facebook products. The company wants people to use Facebookas and Messengeras new in-app camera, so itas added Camera Consequences like illustrations and animated masks that people can apply to their photos. And if people use them, Facebook could start pitching advertisers on buying branded ones like the kind Snapchat sells.

Facebook may be hitting a point where soon it canat squeeze much more milk from its news feed cash cow. But itas raising so many calves that it may not matter in the long run.

Read more: marketingland.com

Leave a Reply

Your email address will not be published. Required fields are marked *