2017: A year of ups and downs for Facebook

By Yash Saxena 

The Financial Year (FY) 2017 turned out to be a mixed bag for the social networking giant Facebook Inc. While managing the advertisements and promotions on the social network, which are the major revenue earners for the company, several lessons were learned. Social media thrives on rumours and this gives birth to the viral videos which are then circulated and shared at an unprecedented pace. The decision of the social mogul to limit such viral content appearing on the user’s feed and instead to give more visibility to the posts of friends reflects its commitment to encourage meaningful connections. This change reduced the time spent on the social networking platform by roughly 50 million hours every day. As explained by Mark Zuckerberg, Founder, and CEO of Facebook Inc, making the overall experience of using Facebook a more people-centric one makes much more business sense than feeding people with passive, unsolicited content.

The upside of Facebook story 2017

In the second quarter of 2017, the mobile advertising business of Facebook grew more than 50 percent as it remained the first choice of many advertisers to showcase their products and reach a larger audience. The company, which now has more than 2 billion regular users, has been steadily increasing the number of ads appearing on the personalised news feed of the users. It has also begun to squeeze more ads into its photo-sharing app Instagram, which has successfully garnered a following of more than 700 million daily users. With these two services bringing in the revenue from advertisements, Mark Zuckerberg has also revealed that the company is turning its attention to monetising its two messaging platforms, Messenger and WhatsApp, both of which have a following of 1 billion users. This is in pursuance of its long-term strategy of expanding its business. The ad revenue from the aforementioned four services of Facebook, which incidentally are the four most popular mobile services in the world, has also led to a rise of more than 44 percent in the shares of Facebook Inc.

Further, anyone who has used Facebook knows that the content on the news feed is entirely user-generated. That is the business model upon which the company thrives. In pursuance of its advertisement led growth, Facebook will soon be introducing a scripted video service. This is a sharp change in its content strategy and is expected to be a significant driver of business in the next two to three years. The revenue generated from the mobile advertising business, also termed as ‘Ad Dollars’, accounted for 87 percent of the company’s total advertising revenue of $9.16 billion, up from 84 percent in 2016.

The downside of the story

Globally, the time being spent on social media has been reducing. The graph of social engagement has reached a tipping point and is on a downward trend. As a result, the time spent by the users was down 5 percent. This, combined with the strategy of Facebook “to prioritise meaningful social interactions over passive consumption of content” by showing people more of their friends’ posts rather than ads have led to a significant decline in the time spent by users on Facebook.

The most disturbing event in 2017 for all the social media giants including Facebook was the interference by Russia-linked sources. In an effort to breach the harmony of the American masses and meddle with the Presidential elections, Russian agents disseminated inflammatory posts on the social media platform that reached almost 126 million users. The effort was to clandestinely influence and sway the American voters during the elections. The Kremlin has a long history of attempting to bring about divisions in the American society by using the social media and Facebook has been key to its nefarious designs simply because of its deep penetration into the society. In its remarks sent to Congress, Facebook revealed that the Internet Research Agency, a shadowy Russian company linked to the Kremlin, had spread around 80,000 pieces of disturbing and sensitive content that was seen by nearly 29 million Facebook users. Such blatant misuse of platforms as powerful as Facebook can have serious repercussions on the society and make it a bane rather than a boon.

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