One of Facebook’s core statistics doesn’t look so good. Time spent on the network — a number that drives the tech giant’s revenue — is down by an estimated 50 million hours per day.
Facebook now reaches 2.13 billion people per month and has 1.4 billion daily active users. If we were to revisit that 50 million hours number on a per user basis, it would be a drop of 0.035 hours aka 2.1 minutes per user per day.
For CEO and cofounder Mark Zuckerberg, that’s a necessary drop for his company’s future success. Zuckerberg announced the news Wednesday as part of Facebook’s quarterly earnings, reflecting on its 2017 revenue and spending and the future of the company.
Facebook’s stock was down nearly 5 percent in after-hours trading, but by the end of the hour-long call with investors, had jumped up by 2 percent. Zuckerberg knows it won’t be pretty going forward either.
“2017 was a strong year for Facebook, but it was also a hard one,” Zuckerberg said in a statement. “In 2018, we’re focused on making sure Facebook isn’t just fun to use, but also good for people’s well-being and for society. We’re doing this by encouraging meaningful connections between people rather than passive consumption of content.”
Time spent on Facebook
The world’s largest social network (a.k.a. advertising giant, democracy wrecker, and virtual reality headset maker) is far from dead. This is Facebook we’re talking about. The site traffic isn’t everything when it comes to financials. Revenue from Facebook ads is driven by actual clicks. Facebook still brought in $4.26 billion in profits last quarter.
Zuckerberg’s decry of the old model, that means fewer viral videos.
With Zuckerberg at the helm, Facebook is pushing itself to become a place where people enjoy themselves and genuinely want to keep coming back. According to Zuckerberg’s decry of the old model, that means fewer viral videos, unless users are having back-and-forth conversations in the comments section.
“Already last quarter, we made changes to show fewer viral videos to make sure people’s time is well spent. In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day. By focusing on meaningful connections, our community and business will be stronger over the long term,” Zuckerberg’s statement continued.
Zuckerberg’s hope is that the ads in Facebook will be better, and therefore bring in more revenue, too. “When you care about something, you’re willing to see ads to experience it,” he said.
Money is still no issue for Facebook. Revenue reached $12.97 billion for the fourth quarter of 2017, up 47 percent from last quarter. Earnings per share came out below analyst’s estimates, $1.21 compared to $1.94 projected. However, Facebook made sure to note the U.S. tax bill affected its overall gains. Had that one-time charge not been taken into account the result would have been $2.21, beating expectations.
For Facebook, revenue is all about smartphones. Mobile advertising revenue now makes up 89 percent of overall ad revenue, up from 84 percent a year prior.
An ideological shift
Facebook is now grappling with its new reputation. The company’s 2018 has been rocky following a recent shift in its ideology.
After years of fueling growth among digital-first media companies with Facebook Page, the company said it would decrease their influence in the News Feed, dropping it to 4 percent from 5 percent.
Now, Facebook is prioritizing posts shared by friends and family and content from “trusted” news sources, where “trusted” is defined by the community.
Facebook continues to be criticized by its own community for negative impacts on mental health and data privacy. Facebook effort to create an app to help children communicate inspired protest from the that it would negatively affect their wellbeing.
“Shift from showing the most meaningful content to people to encouraging the most meaningful interaction,” Zuckerberg said. “It’s not just one News Feed change… It’s going to be a series of product changes.”
Zuckerberg called out Stories — the vertical photo- and video-sharing product that the company copied from competitor Snapchat — as a new product aligned with meaningful interactions on and off the platform.
“Stories is a better format of sharing multiple quick video clips throughout your day,” he said. WhatsApp and Instagram are number 1 and number 2 “most used Stories product in the world.”
These updates are far from Facebook’s only worry going forward. Facebook is dealing with the backlash of incidentally spreading Russian propaganda during the 2016 presidential election and the overall presence of fake news on the site. Facebook also is combatting hate speech. Last year, U.S. lawmakers grilled Facebook, as well as Twitter and Google, on these practices and demanded that the companies make changes, in particular with transparency on political ads.
Separately, Facebook is addressing data privacy and tools that allow users to further change their ad experience ahead of the European Union’s upcoming privacy changes known as General Data Protection Regulation (GDPR).
Big bets ahead
But not everything is negative or decreasing on Facebook’s horizon. A new initiative called Facebook Watch, a hub for high-quality video, is gaining traction among users, media publishers, and Hollywood studios.
“It’s early. There’s some promising signs,” Zuckerberg said. “It’s really important to internalize that the News Feed ecosystem and the Watch ecosystem are two totally separate things … We’re optimistic that Watch will be a use of video to bring people together.”
Zuckerberg and his team spoke little of hardware updates, but the company has made big announcements already this year with its products. Facebook’s virtual reality division Oculus is launching a new headset in China thanks to a partnership with Xiaomi.