It’s not an overstatement to say that Facebook has had a tumultuous 2018. Rocked by privacy scandals, battered in the markets, and beset by PR controversy on all sides, the social giant’s image has taken a hit. Observers from all ends of the media industry are wondering what the way forward is for one of the most successful companies in history.
I’m here to tell you that in spite of the short term pain, Facebook does have a way forward in 2019 and beyond. The migration from the News Feed to Stories is as disruptive for Facebook (and brands) as was the original introduction of the News Feed itself, and the subsequent transition from Desktop to Mobile. These changes are difficult and fundamental; they alter the way people consume content, how much time they spend with the platform, and how they engage with advertising.
Facebook spent the better part of 2018 in the midst of this difficult transition in its business fundamentals. Those fundamentals have been obscured, to a degree, by issues like data privacy and politics. Beneath those public controversies, we are witnessing an even more structural shift in Facebook’s advertising business (ie. its entire business). I predict that 2019 will be the year where Facebook’s strategy for navigating that shift is made clear to advertisers and to markets, and this time next year we will be in a position to better determine whether the company can emerge from this transition in a position of strength.
Mind the gap
Advertising always follows eyeballs. Every Mary Meeker chart for the past 20 years has shown a gap between where people are spending their time with media and each channel’s respective share of advertising. For a long time, the biggest gap was digital. Then it was mobile. Now it’s Stories.
According to Facebook, there are 400 million daily active users (DAUs) on Instagram Stories, 450 million DAUs on WhatsApp Status, and 300 million DAUs for Stories on Facebook and Messenger. That’s a lot of eyeballs! Why hasn’t the ad spend followed?
Stories are a completely different user experience from the Facebook Feed. At present, people consuming Stories are leaning back more and watching the content play linearly as opposed to hunting and pecking through the Feed for what they want to see. And, if they are leaning forward, it’s to tap-tap-tap through the Stories (and ads) they don’t want to see.
Meanwhile, while Facebook figures out how to change this behavior, ad load in Stories is lower than on Feed and ad formats are fewer. As a result, ad engagement is lower, which explains why ad spend growth is decelerating. How do they break out of this cycle?
The path to Story glory
When it comes to changing the mindset around Stories on Facebook, the company need look no further than Instagram. Currently, one-third of the most viewed Instagram Stories are from brands, and roughly half of all businesses on Instagram have created a story in a typical month. Instagram also has multiple ad formats for Stories, including Carousel Ads and Canvas. Across the brands that use my company’s platform, we’ve seen ad spend increases on Instagram in the consistent triple digits on a year-over-year basis.
Through Stories, Facebook can completely rejigger (that’s a technical term) the algorithm and set new expectations about what type of content you will encounter and from whom. It can police Stories to keep out bad actors and fake news. And it can fine-tune the ad load and ad formats to create a new balance for how user experience and monetization can coexist.
Appetite for such changes on Facebook is only limited by the expectations consumers have developed over years of using it – expectations they don’t have yet around Stories. But just as with the transition from desktop to mobile, these expectations will change with time, and brands need to adjust accordingly.
Evolve or die
Per Facebook, 56 percent of a brand’s sales lift from digital advertising can be attributed to creative quality. To make Stories sing, brands must invest in bespoke creative. You can’t just repurpose the static images and videos you created for the Feed. We saw something similar with the migrations from TV to digital and desktop to mobile: Creative that worked for the former did not work for the latter. As Facebook puts more focus on Stories and consumers put more time and energy into them, marketers must follow suit and design ads with Stories in mind.
Sure, it’s annoying to have to revisit Facebook advertising best practices after years of fine-tuning to maximize ROI. But the landscape has changed, and growth (for brands and Facebook alike) will not come from doing more of the same.
Stories are the future for Facebook. 2019 will determine if the markets — and the advertising community — are willing to go along for the ride.
Anupam Gupta is CPO at 4C Insights.