Facebook Bets Big On Stories, Messaging And Watch – Here Are The Biggest Challenges

What’s the Story with bundling?

Facebook predicts that by 2020, Stories will have more sharing and consumption than news feed. But Stories monetizes at a lower rate than the news feed, where users can easily scroll through multiple ads in the time it takes a single ad to wedge itself between two organic Stories.

Advertiser demand is also lower for new units, which is why Facebook is aggressively pushing automatic placements – that’s where Facebook decides whether ads run in-stream on Watch or on the news feed. Right now, there’s no way to buy Facebook Stories as a standalone placement.

But when ad placements are automatically bundled together – Facebook calls it “optimization” – that makes it difficult for buyers to figure out incrementality for specific placements, said Kieley Taylor, managing partner and global head of social at GroupM.

“If you dig in, you often see some curious bundling choices, and that obscures how well any one new offering is performing,” she said. “If something is working well, or not, we want to be able to set a budget specifically in support of that initiative, or not.”

Mark Zuckerberg acknowledged on the company’s most recent earnings call that Facebook’s non-news feed ad offerings aren’t as baked as they could be and that Facebook’s revenue growth will probably take a hit during the transition from “a feed-only world to a feed-plus-Stories world.”

But that assumes the future really is a feed-plus-Stories world in which growth continues to hockey stick and usage doesn’t slough off.

“There’s no doubt that Stories have caught on in a major way as a communications medium for younger people,” said Debra Aho Williamson, a principal analyst at eMarketer. “But we don’t yet know if Facebook will be successful at convincing its relatively older users to use Stories.”

Is messaging too private for ads?

Facebook is well-positioned with Messenger and WhatsApp, however, to take advantage as people shift the way they share from one-to-many to a mixture of one-to-one and one-to-a-few – and there’s a lot of runway for growth.

Ad experiences are still new in Messenger and Stories-like ads aren’t even rolled out within WhatsApp yet. The challenge here is being judicious enough not to mess with what users consider a personal place to communicate.

“Facebook needs to tread carefully, particularly around messaging,” said Forrester analyst Collin Colburn. “It’s a concern of ours that if advertising is heavily introduced in WhatsApp that it will result in users fleeing from the platform.”

Like Stories, messaging won’t monetize at the same rate as news feed, and buyers are still early on in figuring out how it fits into their marketing strategy. Agencies are starting to experiment, though.

“We’re open to testing and learning across new inventory, and messaging is a particularly interesting one,” said Amy Darwish, US director of media operations at Omnicom-owned Resolution Media. “News feed placements are still a central component for us, but it’s becoming saturated and we need to be agile enough to find our desired audience in other places.”

Watch needs better measurement and better content

Another of those other places is Watch, a cornerstone of Facebook’s “time well spent” gambit.

Facebook changed its news feed algorithm in January to prioritize posts from friends and family over content from publishers and brands. The idea with Watch (IGTV, too) is that they can serve as separate hubs where shows and longer-form videos can live without displacing social interactions, while still fostering communities that crop up around the content.

Facebook could “crack the code” on interactive viewing by weaving social features like group viewing and live commenting into the Watch experience, Taylor said. But Facebook needs to attract the right type of premium content, competing with other VoD platforms.

“In order to not have undue pressure on the CPMs in the auction, Facebook will have to be mindful of the cost that goes into premium produced content,” GroupM’s Taylor said. “At the same time, it’s a balancing act to make sure that the monetization is lucrative for partners because there are so many other places they could stream and distribute their content.”

Facebook also needs to answer the buy side’s perennial rallying call for more transparency and better measurement if it expects advertisers and agencies to jump in with pocketfuls of budget against largely unproven inventory.

Although video is “a huge part” of Resolution Media’s content strategy, Darwish is eager for better viewability measurement across new placements like Watch and IGTV and for the ability to create whitelists, rather than just blocklists to help with brand safety.

“We do need Facebook to increase measurement opportunities against new inventory and placements,” Darwish said. “We’ve got to be able to more quickly evaluate performance and assess the best approaches to include in the mix, especially heading into 2019 planning.”

This post was syndicated from Ad Exchanger.