7 big changes coming to Facebook

26 Mar 2015 | Author: | No comments yet »

Facebook Finds Strength As A Family, Not An App.

Facebook hopes to turn its messaging service into one that operates independently of its social media network as it faces intensifying competition from Twitter and Google, as well as fast-growing messaging apps such as Snapchat and WeChat.

Facebook’s 30-year-old CEO unveiled a slew of new initiatives at the social network’s annual developer’s conference Wednesday that could threaten Silicon Valley players from Twitter to Snapchat.SAN FRANCISCO — Facebook is trying to mold its Messenger app into a more versatile communications hub as smartphones create new ways for people to connect with friends and businesses beyond the walls of the ubiquitous social network. Photo: AFP San Francisco: Facebook Inc. on Wednesday opened up its Messenger service for developers to create apps and for shoppers to communicate directly with retailers, as the Internet company seeks to expand its reach.

Among Facebook’s new features: the ability to post videos and embed them on any other Web site — a key feature of Google’s YouTube service that Facebook didn’t previously offer. The disease, Facebook Second Guessing Syndrome, has as its worst symptom an embarrassing tendency to predict an early peak for the fortunes of the world’s largest social network.

That, combined with (for now) the lack of annoying preview ads, could increase momentum for Facebook videos, which already see 3 billion streams a day, according to the company. Of Facebook’s products. “Facebook used to be this one blue app on your phone, and now Facebook is a family of apps” said its CEO as he showed off the user counts of the different family members. To techies who laud Apple for its hardware and software design or Google for its data prowess, Facebook has long looked a little frivolous and more than a tad faddish.

Facebook is likewise gearing up to battle Google with an upgrade that allows its advertising platform LiveRail to serve video and mobile ads from Facebook or other networks directly to mobile apps. The company’s genius is in bringing people together and persuading them to stick around, an unusual skill in Silicon Valley, and something Mark Zuckerberg’s company has done consistently for over a decade. Messenger will feature more than 40 different apps in the next few days, allowing users to send each other sports clips, animations and other items, Facebook said.

Using its vast trove of user data, Facebook can clue in developers on how their ads are faring — a capability that threatens rival services from Google, Yahoo! and Twitter’s MoPub platform. That’s despite various potential threats to its dominance — the rise of alternative social networks, a shift from desktop computers to mobile phones and the perpetual technological fickleness of young people. Facebook said it would soon begin testing a system to allow businesses to use Messenger to offer personalized service to customers after a purchase is made. Facebook has even managed to reap substantial profits from its operations, beating analysts’ expectations in every quarterly earnings report over the past two years. Facebook has amassed a collection of mobile apps in recent years, including photo-sharing app Instagram and messaging service WhatsApp, which Facebook acquired for $19 billion in 2014.

Younger people, in particular, are using a wide range of mobile-messaging apps to communicate with different circles of friends, while spending less time broadcasting their activities on Facebook’s more expansive social network. Now, as the company holds a developer conference this week in San Francisco, another theory arguing that Facebook’s success may be illusory has been making the rounds.

Rather than just being a social network, Facebook sees strength as an interconnected clan of experiences — developed in-house, acquired, and tapped in from outside. Facebook partnered with online retailers Zulily and Everlane to let consumers contact them directly on Messenger to change online orders, such as the colour of a shirt, for example, and be notified when a purchase has shipped. The trouble, the theory goes, is that Facebook is increasingly depending on these ads, many of which are run by other start-ups hawking their own apps.

A segmentation feature can be used to drill down on key user groups to learn more about what makes them engage in certain behaviors — either positive or negative to the developer’s business. He also showed off “spherical video,” an immersive new video format shot by a cluster of 24 cameras in which the viewer can rotate his or her field of view. For some industry observers and market analysts, Facebook’s reliance on money from other app companies looks like the making of an unsustainable monoculture — not a lasting business, but something spun up in the heady froth of a venture capital smoothie. “There are now a number of revenue streams that are being driven by venture dollars,” Bill Gurley, a prominent venture capitalist who has been warning of a tech bubble, said recently in an onstage interview at South by Southwest in Austin, Tex. “Facebook and a little bit of Twitter’s revenues are now coming heavily from mobile downloads.

Facebook’s revenue last year surged 58 percent to $12.5 billion, which has enabled the stock price to more than double from its initial public offering price of $38 in 2012. But when you’re talking about trying to connect every human on earth, a singularly focused app alone can’t possibly meet the diverse needs of a diverse population. Those ads are now an increasing percentage of their revenue, and they’re being spent by these excessive venture dollars.” The notion that Facebook and other social networks will suffer most deeply when the bubble bursts sounds plausible because it rehashes the last tech boom and bust, when advertising revenue run-ups at huge web portals (remember those?) turned out to be funded mainly by venture capital investments. Zuckerberg explained “We’re building this family so we can offer unique, world-class experiences for every way that people want to share.” Facebook was built as a website, not an app.

In 2001, revenue at Yahoo — the largest portal, and something like the Facebook of its time — plummeted by almost $400 million when start-ups stopped spending during the bust. While developers may also use the tool to track app advertisement campaigns on other social platforms, the bells and whistles will be heavily geared toward measurement on the Facebook platform, one VentureBeat source said. The growing popularity of mobile messaging, though, could result in less time spent on social networks, which would give Facebook fewer opportunities to learn about its users’ interests and show the digital ads that make most of the company’s money.

That threat is propelling Messenger’s expansion and also prompted Zuckerberg to spend $22 billion last year to buy WhatsApp, another mobile-messaging service that has more than 700 million users. A large segment of WhatsApp’s audience is outside the U.S. and Western Europe, making it more likely it won’t be adding as many new tools as Messenger has, Facebook’s Marcus said.

Most Messenger apps are installed on iPhones and top-of-the-line Android phones, which provide the processing power needed to handle a range of multipurpose tools. Marcus said the new features were not offered on its WhatsApp messaging service because that was accessed on a wide variety of mobile phones, including low-end devices which are not well suited for the new functions. The decision to allow outside applications to operate within Messenger mirrors a pivotal decision Zuckerberg made eight years ago when he opened Facebook to other programmers. If people didn’t want to read links or deal with the personal drama of status updates on Facebook, they could just let the pretty pictures flow over their eyes. As mobile became the dominant way people connected, Facebook saw that its messaging system’s growth was hampered by keeping it buried inside the main app.

Wednesday, Zuckerberg predicted messaging apps eventually will include virtual-reality technology, something Facebook acquired last year when it bought Oculus for $2 billion. It’s the effort to reach these paying customers — and not venture funding — that is often the reason for all the money pouring into ads for apps. They appear in your Facebook News Feed or Twitter stream and encourage you to download apps from companies that make mobile games and e-commerce and travel services; they also come from big brands like Target and Chase. If competitors controlled the top photo sharing or messaging app, they could use those as a wedge to pry themselves into Facebook’s core social networking ad business. According to Cathy Boyle, an analyst at eMarketer, a research firm that studies the online advertising business, the market for app-install ads is growing rapidly.

It knew people wanted a wider variety of things to do on Facebook, from using utilities to playing games, but it didn’t have the time, resources, or know how to create them all in-house. It’s extending what counts as family by inviting over 40 developers to build companion apps for creating and discovering content to be shared through Messenger. Marketers can target specific types of customers whom they want to present with an ad for a certain app, and they can also track exactly how much money they make from customers they get through an app ad. As Zuckerberg noted “People need to be able to share what matters to them with all the different groups of people they care about this is how we give people the power to make the world more open and connected.” It’s an approach similar to the monolithic chat apps of Asia, like WeChat and Line.

Several recent venture-funded flops, including Groupon and Fab.com, were tripped up by huge marketing spending that did not lead to lucrative long-term customers. If today’s money-burning, venture-funded app companies — Uber, Lyft, Airbnb and many more — are also overestimating the value of new customers, could they wake up one day to find they’re spending too much on app ads?

In an interview, Andrew Bosworth, the company’s vice president for advertising, argued that start-ups today were more disciplined than in the recent past, with many analyzing not just how much they’re spending to get new users but also whether those people are actually buying stuff. “That’s been the big shift. But when today’s start-ups look at these ads, “They’re asking, ‘Can you put a dollar in and get two dollars out?’ If you can, you spend, and if you can’t, you don’t.” Sure, Mr.

But he added that Facebook wasn’t counting on app ads for its long-term survival. “I think this will be a stable ongoing market,” he said. “I think it will plateau at some point in terms of share, as smartphone growth plateaus. And if these apps don’t see business advantages from being a Messenger companion, like getting downloads of their main apps, they might not bother to build or maintain another set of code. When I asked how Messenger will make developers feel valued during Messenger head David Marcus’ F8 panel Q&A, he insisted “The beauty of the platform is that developers get attribution. If your friends are using apps and sharing content with you, you’re able to download the app and share with more friends.” But the sour taste of unreliability is hard to wash out of developers’ mouths, and some virality now might not be enough.

But it’s entering a new life phase with new responsibilities, and it will have to balance its affection for users, advertisers, developers, and its own bottom line.

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