Local News, Live Sports: Facebook’s Latest Strategy To Increase User Engagement

by Trefis Team
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Facebook (NASDAQ:FB) had a strong Q1 2017, with revenues increasing 49% year on year on the back of strong growth in advertising revenues. Advertising on its core platform comprises nearly 80% of Facebook’s total revenues. However, the company expects growth in advertising revenues to slow down as it focuses on keeping ad impressions at sustainable levels. Subscriber growth and higher price per ad are likely to drive advertising revenue growth in the future.

In order to add more subscribers to its nearly 2 billion strong user base and, more importantly, keep them engaged actively, Facebook consistently looks at ways to improve the quality of the content on its platform and make it more relevant to its users. Reports suggest that Facebook is testing products which will bring more local news to its platform in order to increase engagement. The company is working closely with local publishers to execute this initiative. Facebook plans to use its popular “groups” feature to create communities around local news to help people share and discuss local stories. The company’s research reveals that people are more comfortable in a public forum when identified as a local, and publishers are keen to connect with communities via local stories. This initiative should help Facebook increase user engagement, as the company sees a decline in sharing personal stories.

While Facebook started off as a platform for its users to connect with friends and family via photos and status updates, between 2015 and 2016 the platform witnessed a 15% decline in personal content sharing.  As users move to smaller and more private platforms (such as a Whatsapp group) to share content, and privacy concerns discourage some users from sharing personal photos on Facebook, the company is looking at alternative ways to create engaging content. Users are now sharing more web links and videos on the platform, and local news could be one way to encourage users to share articles among their communities about matters concerning the local group.

Facebook is also looking at ways to make its platform a destination for consuming live sports. The company recently entered into a deal with Major League Baseball to live stream at least 20 Friday MLB games. While these games are not exclusive to Facebook, the company plans to create a “stadium” experience online with chats, debates and discussions on the games. Through these broadcasts, the company will also be able to test its new introduced “video” tab designed to encourage consumption of videos on its platform.

As Facebook’s content moves from users’ personal stories to more articles and videos, we believe the company has a solid strategy in place to engage users. High user engagement is one of its key strengths which attracts advertisers and generates revenues for the company. This strategy should ensure that the momentum continues as the content on Facebook’s platform transforms.

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