Mark Zuckerberg Promotes ‘Video First’ Vision to Investors
SAN FRANCISCO—When Mark Zuckerberg says he wants to talk video first, he means first.
At the top of the third-quarter earnings call with analysts on Wednesday, Zuckerberg wasted little time getting to the point.
“I want to start by talking about our work around putting video first across our apps,” he said. Time and again throughout the call, Zuckerberg drew attention to Facebook’s company-wide push to become “video first.”
Zuckerberg believes that within five years most of what people consume online will be video, subsuming words and photographs. And he’s determined to catch this next big content wave — and escalate competition for eyeballs and advertising dollars with the buzzy and youth-friendly mobile app Snapchat.
With good reason. Video ads are lucrative, and give Facebook a better shot at competing for television ad dollars, a $70-billion prize in the U.S.
Already video ads are expected to boost Facebook’s revenue growth in 2016, as marketers increasingly embrace video. In RBC Capital’s February survey with AdAge, of nearly 2,000 ad professionals, 69 per cent said they were very or somewhat likely to buy or were already buying video ads, a 3-per-cent increase from the prior survey. The number of marketers not interested in or unlikely to buy autoplay video ads decreased three points to 31 per cent.
A boost from video ads could come in handy in 2017. Facebook said it expects revenue ad growth to slow next year.
“People are creating and sharing more video, and we think it’s pretty clear that video is only going to become more important,” Zuckerberg told analysts. “So that’s why we’re prioritizing putting video first across our family of apps, and taking steps to make it even easier for people to express themselves in richer ways.”
Zuckerberg promoted his “video first” vision to investors on the second-quarter earnings call. It wasn’t the first time he had spoken of video in these terms. At Facebook’s F8 developer conference in April, Zuckerberg said in 10 years “video will look like as big of a shift in the way we all share and communicate as mobile has been.”
The Menlo Park, Calif.-based company reported third-quarter sales grew 56 per cent to $7.01 billion, topping analysts’ average estimate of $6.92 billion. It was the fourth straight quarter of more than 50 per cent revenue growth. Facebook generated 84 per cent of its advertising sales from mobile phones, unchanged from the prior quarter.
Advertising provides more than 97 per cent of the social network’s revenue. As the company spends money on new areas like virtual reality and mobile messaging that may not generate revenue for years, its performance is tied to its main advertising business, particularly on mobile phones.
Facebook and Alphabet Inc.’s Google, have driven the growth in digital advertising spending, together capturing 68 per cent of that revenue in the first half of this year, according to the Interactive Advertising Bureau, a non-profit industry group.
Facebook will begin limiting its ad load — the number of ads it allows per the number of news feed stories — to keep from turning away users, who come to the site to see updates from their friends and family, not ads, Wehner said on the call. Facebook’s stock has gained 22 per cent this year.
Gain in Users
In the third quarter, Facebook increased its monthly active users 4.7 per cent from the previous quarter to 1.79 billion, topping analysts’ estimates of 1.76 billion. Daily users rose to 1.18 billion.
In a video-first world, Facebook plans to put a camera, not a text box, at the centre of the user experience, like Snapchat does. “Soon, we believe a camera will be the main way that we share,” Zuckerberg said on Wednesday.
Facebook is running a test in Ireland that puts the camera that offers dozens of special effects such as masks and frames in a prominent spot in News feed. Facebook Messenger is also testing new camera and video features, Zuckerberg said.
Facebook Live, the video-streaming service, is a key initiative in Zuckerberg’s video push. Since May, the number of people “going live” at any given moment has grown by four times, he said.
For Zuckerberg, the allure of Facebook Live over traditional video is about interacting with other people.
“Live video we think represents an example of something new,” Zuckerberg said. “It’s not the kind of traditional video experience. It’s actually a more social experience.”
With video becoming increasingly important to Facebook’s main app and to its family of apps, Facebook is rolling out new features.
In August, Facebook launched Instagram Stories so that Facebook users could share moments of their day through photos and videos that appear in a slide show format and disappear after 24 hours, That feature, lifted from Snapchat, now has more than 100 million daily active users.
And, Zuckerberg said, Facebook is getting closer to rolling out “video home,” a tab for videos in the Facebook app. “Video home” could eventually become its own app like Facebook Messenger, he said.
“It’s a good experience inside Facebook but we also have had examples over time like Messenger, for example, where we started them on Facebook and decided that in order to fulfil their potential it needed to be its own experience over time,” he said.