The Year of the Zuck

File Apr 28, 8 47 09 AM

Hey y’all, have you signed up for The Foxwell Digital Download? It’s our monthly dispatch on all things digital–social media news, product rollouts, and more. Sign up here: http://foxwelldigital.com/foxwell-digital-download/. Here’s our latest installment for your reading pleasure.

We’re kicking off this issue of The Foxwell Digital Download with a probing albeit utterly random question: Should 2016 remain the Year of the Monkey, or should it be renamed Year of the Zuck? For starters, children born this year are destined to be intelligent, social, and confident. (Marky Mark Z for sure.) Negative personality traits include being egotistical, arrogant, and restless. (He’s probably those things, too.) Their lucky colors are supposedly blue and white. (Well that’s just weird.) The Chinese zodiac is a 12-year cycle; 2016 marks Facebook’s 12th birthday. (So is this storyline now going to involve a grassy knoll and a magic bullet theory?)

Okay, stay with us. We realize this is an unconventional way to begin an e-newsletter, and we promise we’re not diving into one of The Donald’s infamous conspiracy theories. We just obsessively read, discuss, and debate social media news like it’s our job (cuz it is) and we’ve seen a very clear and obvious trend over the past couple of months: Facebook news is everywhere and you can’t miss it, even if you’re living under a rock, or just looking at rocks.

Unprecedented quarterly earnings, live video, conversational commerce, messenger bots, newsfeed algorithmic changes, time spent on the platform, allegedly suppressing political content…how does it all translate into FB’s long-term goal to dominate the internet?

If you believe in the adage “any press is good press” then Zuck and his team are undoubtedly doing an excellent job at the internet domination thing. But how do all these recent stories, industry buzz, and product announcements affect FB advertisers big and small, individual users, and online communities? Not to mention is there a greater, interconnected reason to all this press, or is it just a coincidence that the majority of tech bloggers and journalists focus all their attention on the blue and white media darling of Silicon Valley?

We Facebook-friendly Foxwells believe 2016 is unequivocally going to be the Year of the Zuck and all this press (good and bad) plays into his master plan. This recent piece from The Atlantic sums up the hype perfectly, “Facebook’s power is unprecedented. It shouldn’t be surprised if its scrutiny is similarly historic.” The piece goes on to explain how Facebook is both a social media network and a broadcast news platform, “It is a modern telephone network and television, a global mail system, and a global newspaper.” Well, if you put it that way. Yeah, it would make sense that there are nonstop stories about a company doing something that’s never been done before.

Let’s dig into Q1 earnings. Here are the most important highlights: Facebook’s daily active users (DAUs) were 1.09 billion on average for March 2016, an increase of 16% year-over-year. Mobile DAUs were 989 million on average for March 2016, an increase of 24% year-over-year. Mobile advertising revenue represented roughly 82% of total advertising revenue for the first quarter of 2016, up from 73% of advertising revenue in the first quarter of 2015. And lastly, free cash flow for Q1 was $1.85 billion. This is not just a company poised for financial success; Zuck’s baby is skyrocketing.

Facebook’s surge, however, has led some critics to argue that the company is perilously perched and could topple as fast as it once grew. If you need to be reassured on Zuckerberg’s vision and the big bets he’s taking, listen to this recent Motley Fool podcast dissecting FB’s announcement of a 3-to-1 stock split. The split will be up for a vote at the company’s shareholder meeting next month and is likely to pass, just in time for Mark and Sheryl to grab a couple of ice cold Americas.

In effort to keep its users from switching to Periscope or Snapchat, Facebook is partnering with publishers and celebrities to make big announcements, host online conversations, and engage with fans via Facebook Live. Like with any new FB product rollout, there’s been swift user backlash followed by various product updates. Facebook is banking on live video to be a creative tool to entice individual users to spend more time on the platform and share personal content, as well as companies and organizations to connect with their customers through a new, interactive experience. We’ll see in coming months, however, if Facebook Live can translate into revenue and future ad units, not just deeper audience reach and additional time on site.

Speaking of time, Facebook users are spending a lot of it on the platform instead of eating, drinking, or exercising. As this New York Times piece explains, “Time is the best measure of engagement, and engagement correlates with advertising effectiveness. Time also increases the supply of impressions that Facebook can sell, which brings in more revenue (a 52 percent increase last quarter to $5.4 billion). And time enables Facebook to learn more about its users — their habits and interests — and thus better target its ads. The result is a powerful network effect that competitors will be hard pressed to match.” And Zuck isn’t stopping at 50 minutes a day; they want users to remain engaged and informed. He and his team are listening to user surveys, making ongoing algorithmic changes to the News Feed, and offering marketers a more diverse suite of advertising units. While they’re clearly winning the time-on-site race, some critics believe Facebook is losing on value-added and relevancy. Zuck is very much aware of this issue and he wants his network to refuel on social media gold: baby photos and puppy videos.

In addition to betting big on live video, Zuckerberg thinks users will move toward interacting “conversationally” with companies and brands via Facebook Messenger. Announced at Facebook’s annual developer conference last month, users can now learn more about products, find the perfect gift, and deal with issues stemming from returns/exchanges through Messenger chatbots. This announcement is just the beginning for Messenger’s expansion, other advancements within the app now include Sponsored Messages and Click to Message ads. Our take? We hope this new feature doesn’t mean a glut of corporate messages like email marketing has become. Bryan Hurren, strategic partnerships manager at Facebook Messenger, recently assured us and other Social Media Marketing World conference attendees that this wouldn’t be the case and his team is closely guarding against various types of mass, unchecked spamming.

Even if it is your year, you can still have a couple bad days. Conservative politicians are calling on Facebook to release more information on how stories surface via its News Feed algorithm and how current events receive the coveted Trending Topics status. Zuckerberg and his search team have denied suppression allegations noting, “There are rigorous guidelines in place for the review team to ensure consistency and neutrality. These guidelines do not permit the suppression of political perspectives.” Yo Zuck, take our advice if you’re called to testify: bring donuts, lots and lots of donuts. Senate Republicans won’t care if you helped swing an election; they’ll be too busy licking their fingers and going on Facebook Live to brag about the free breakfast.

That’s it for Volume 5 of The Foxwell Digital Download. We’d love to hear from you: What do you like most about the FDD? What else should be included? How does the FDD add value to you and your team? As always, feel free to forward and share with your friends and co-workers. We’re heading out to buy party favors to celebrate Year of the Zuck—hoodies and grey t-shirts for everyone!

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