- Facebook made a huge change on Thursday, altering how the service’s news feed works.
- The news feed – the main page of Facebook – now prioritises posts from people you know that spark engagement and conversation over posts from brands and publications.
- Facebook CEO Mark Zuckerberg said he expects the change could result in users spending less time on Facebook.
- That line could worry investors, and Facebook’s stock was down 4% Friday morning.
There may be a specific reason for that – CEO Mark Zuckerberg just said that the change its news feed will likely result in Facebook users spending less time using Facebook. “By making these changes, I expect the time people spend on Facebook and some measures of engagement will go down,” Zuck wrote in a Facebook post.
His post, coincidentally, is exactly the kind of status update that Facebook’s big change is going to prioritise.
When you sign on to Facebook, the first thing you see is the news feed: status updates from friends and family, sponsored links, videos from brands or publications you follow, etc.
On Thursday evening, Facebook announced that its news feed was changing. “You can expect to see more from your friends, family and groups,” Zuck said in the announcement. “You’ll see less public content like posts from businesses, brands, and media.”
By de-emphasising content from brands, and links to publications, Facebook potentially becomes less valuable to said brands and publications. Facebook currently makes money from the advertising revenue generated from ads running alongside posts and videos from brands and publishers.
If the changes cause people to spend less time using Facebook, that’s less time viewing ads. Facebook’s potential for making money – at least the perception of that potential – could be diminished.
That change, in addition to Zuck’s warning about potentially lower engagement, was apparently enough to spook investors.
But Zuck has a long-term play in mind.
“I also expect the time you do spend on Facebook will be more valuable,” he wrote. “And if we do the right thing, I believe that will be good for our community and our business over the long term too.”
At least one analyst, RBC Capital’s Mark Mahaney, seems to agree with that long-term play, but noted that the change “could reduce ad load” but that could be offset.
“Overall, we do not think this will have any meaningful impact on advertising revenue growth,” Mahaney wrote in a note distributed to clients Friday morning.
“We believe these changes will be beneficial to Facebook in the medium and long term. In our view, making the feed more relevant should boost user and engagement growth over time. Facebook is making the service more social and less media, and that’s likely a positive for the vast majority of users,” he wrote.
“Near term, these changes could reduce ad load, though we think pricing may rise to offset this. Per our last marketer survey, marketer perceptions are still very positive. Almost 60% of Facebook advertisers think their ROI has actually gone up over the last 6 months vs. less than 10% who say it has gone down. And this ratio has been remarkably constant over the last several years.”
You can see Mark Zuckerberg’s full Facebook post right here:
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