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MENLO PARK, Calif. — Today, throngs of reporters have gathered at Facebook’s Menlo Park headquarters to hear about the social network’s latest updates to News Feed.

News Feed is the single most public-facing Facebook feature. As such, it’s also the most-often complained-about feature.

Leading up to today’s big launch, consumers and news outlets alike have been buzzing about what the changes might bring and what normal Facebook users are hoping to get out of the day’s announcements.

But what most are hoping for is a massive change that would toy with Facebook’s long-cultivated revenue streams and tinker with one of its most precious pieces of IP: The News Feed algorithm.

How News Feed works now

Currently, News Feed is the service’s default landing page for logged-in users, displaying updates, images, and events from all your Facebook-connected friends as well as any brands, companies, or organizations whose Pages you “like” on the site.

From its inception, the Facebook social graph has faced a problem of information overload. Imagine you have just 100 friends on Facebook, and each one updates their profile just twice a day. That’s 200 updates of varying lengths, each with a unique claim on your time and ability to respond, and each with a different degree of relevance to your actual interests and daily life.

The solution is almost entirely programmatic. News Feed’s carefully crafted and constantly updated algorithms (bits of logic like if/then statements that attempt to intelligently sort information and arrive at optimal outcomes) attempt to sort every update in your network not just by its overall relevance or importance but also by its direct relevance to you.

Imagine, for example, that you like Kim Kardashian’s Facebook Page. On Tuesday, she posts a selfie with Kanye West that gets thousands of likes in the first five minutes it’s online. Meanwhile, your mom also posts an update that she got a new dog following the passing of the much-loved family retriever; it’s a Yorkie, and your Dad is not happy, and all your siblings and even your cousins are weighing in.

Facebook would know that your dear, sweet Ma’s update is actually more important and relevant to you than Ms. Kardashian’s, and it would put that update at the top of your News Feed.

The problem with News Feed

What most users we polled are hoping for today is a total revamp of how that algorithm works, or at least how well it works.

“Not seeing the posts of the people and pages I’m following,” said VentureBeat reader Dona Collins, is her biggest problem with News Feed. “The algorithm still seems a bit too random.”

That statement was highly “liked” on the VentureBeat’s own Facebook page and was echoed by many others who said they didn’t see enough posts from their actual friends, that they didn’t see the kinds of posts they wanted to see.

Others complained about the prevalence and placement of advertising in News Feed, especially when it comes to Sponsored Stories. These updates initially appear to be similar to other kinds of content from friends in your News Feed; however, they’re actually paid for by companies and promoted to a huge audience regardless of their relevance to individuals. It’s basically commercial algorithmic override.

Sponsored Stories started popping up in their latest, most subtle form in June last year. And interestingly, they’re also a huge part of Facebook’s plan to monetize its mobile products.

“As companies are promoting services more frequently on mobile, this option gives them the opportunity to focus on specific placements that will impact them most directly,” a Facebook rep told VentureBeat in a recent email exchange.

Most users we talked to said they’d simply like to see more relevance in advertising and more separation between the information they see from people and brands.

A three-headed beast

News Feed, along with Graph Search and Timeline, is one of three main products Facebook is focusing on as core to its site and service.

In fact, when Graph Search launched just two months ago, Facebook CEO Mark Zuckerberg said these three products constitute Facebook’s pillars as a company and a web service. And in each of the three, he said the company is striving to focus on its roots, which lie in personal connections and information’s relevance to those connections.

Timeline, the oldest of the three products, came out late in 2011. It represented a complete overhaul in how Facebook designed and displayed personal profiles and information. It was more visually appealing, more personally expressive, and more modern than any product the engineering-centric company had rolled out in the past.

“We looked at a lot of print, and we did entire studies on scrapbooks,” Facebook product chief Sam Lessin told VentureBeat in an interview in San Francisco during Timeline’s initial roll-out period.

“We’d get out a big box of old pictures, flip through the photos and talk about them. We were watching test users reminisce over these things, and we tried to design with that in mind and create that experience.”

Graph Search, on the other hand, is a much more recent launch, and its design is more closely linked to ‘big data’ and infrastructure than pixels and pictures.

At a meeting last month, Facebookers explained in great detail what’s coming next in Graph Search — how the whole product is built on a computer-science understanding of people, places, and things as objects with multiple attributes, nodes in three-dimensional space with edges connecting them to one another. And Graph Search is a powerful new paradigm for finding those nodes based on those connections.

“The biggest problem is the result set sizes tend to increase exponentially,” Facebook engineer Mike Curtiss told us in a recent interview.

“If a node is connected to 100 other nodes … you can get 10,000 output nodes. In another round of execution, you get one million output nodes. This is literally an exponential problem, a difficult problem to scale. … You can’t just solve it by throwing more machines at it.”

These dual challenges — Timeline and Graph Search — and their related disciplines of design and engineering, come together with News Feed to represent everything that Facebook is today and will be for the foreseeable future.

Facebook’s financials

We first got wind of the News Feed changes just a few days ago.

Since then, the company’s stock price has seen a measurable uptick:

FB Chart

In the company’s most recent earnings call, we learned that advertising made up 84 percent of the company’s total revenue — $1.33 billion in the last quarter alone, which makes up 13.3 percent of the total online ad market.

Also, mobile revenue made up nearly one quarter of all ad revenue in Q4 — a (relatively) huge $306 million.

In fact, Facebook’s mobile ads — which didn’t even exist mere months ago — have led to a huge boom in the U.S. mobile advertising market.

“With 25 percent of revenue going to mobile in the fourth quarter, Facebook has cemented its position as the leader in mobile display advertising in the U.S. by a wide margin,” an eMarketer analyst told VentureBeat recently via email.

And we Facebook users can’t forget that all this revenue hangs not on Timelines or Graph Search but on News Feed, which remains for now the sole money-maker among Facebook’s all-important three pillars.

Image credit: Jolie O’Dell

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