Facebook’s Latest Innovation To Make News Feed More “Personal”
While Facebook (NASDAQ:FB) is witnessing a decline in personal content shared on its platform, the company is working on new ways to encourage photo sharing on its platform. After a pilot phase launched in August last year, Facebook is now rolling out Slideshow to all IOS users around the world, which will allow them to automatically combine photos and videos with themed music and transitions. As several users find static photos boring and creating videos for every event might not be practical, this feature gives users an interesting way to share their images and should increase user engagement on the platform. Apple and Google already have their own versions of automatic “movie makers” based on the user’s media and Facebook’s Slideshow would directly compete with these apps. High user engagement is critical for Facebook’s business, We believe constant innovation to ensure that users continue sharing personal content on its platform will be key in driving revenues for the company.
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More Personal Content Can Lead To Better User Engagement
Reports suggest that only 57% of Facebook’s weekly users post on a given week and only 39% post original content. The company has set up a team in London to help develop a strategy to stop the decline in original content. The frequency of views on the News Feed is critical for the company’s advertising revenues. If the News Feed is to contains more sponsored links and less original content shared by friends, it can eventually lead to a decline in user engagement. While Facebook has the highest user engagement among all social media platforms, the company is ensuring that users continue to share original content through initiatives such as Slideshow. In July 2015, analysts at Needham & Company estimated that global users spent an average of more than 20 minutes on Facebook’s core platform every day. However the company has to ensure that this engagement continues, since it is critical for its revenues. Slideshow’s ability to intertwine music and movement with photos should make it an attractive tool to share and view photos, impacting user engagement positively.
Average revenue per user (ARPU) is one of the key drivers for Facebook’s valuation and we expect this number for U.S and Canada to increase from around $52 in 2016 to nearly $80 by the end of our forecast period.
Similarly in the international markets, we expect this number to increase steadily from around $8 in 2016 to nearly $17 by the end of our forecast period.
In the digital era where companies are battling to gain user attention and retain their interest, Facebook’s initiatives to encourage users to share personal content on its platform are key to drive its revenues in future. Slideshow is one such initiative, one that should increase the sharing of photos on its platform and keep users engaged for longer periods of time.
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