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TECHNOLOGY
Bloomberg Businessweek
October 8, 2018
26
*NUMBER OF TIMES FACEBOOK CEO MARK ZUCKERBERG, COO SHERYL SANDBERG, OR CFO DAVID WEHNER SAID “LIVE,” AS IT RELATED TO LIVE VIDEO, OR “STORIES”
OR “STORY,” AS IT RELATED TO THAT FORMAT, ON QUARTERLY EARNINGS CALLS; DATA: BLOOMBERG OPINION ANALYSIS OF EARNINGS CALL TRANSCRIPTS
doors wide for advertising in Facebook sto-
ries. Messenger and WhatsApp have stories,
too. Facebook is trying hard to persuade busi-
nesses to tailor their marketing pitches for sto-
ries and spread them across its lagship site and
on Instagram.
But what if the company is wrong to make sto-
ries a top priority? What if people tire of the for-
mat? Or what if they work for Instagram but not
for other properties? Mark Zuckerberg is making
a big wager on stories, and if he’s wrong, it won’t
be good. Story-formatted ads generate less reve-
nue for the company than its more established
news feed marketing slots, and executives in part
blamed the gap for an expected slowdown in rev-
enue growth.
Facebook has successfully predicted trends
before—most notably when Zuckerberg upended
the company’s strate
gy with his bet that smart-
phones would be the dominant form of internet
activity. He could be right about stories, too, which
are fresh and more authentic than regular social
media posts.
But the company has bet wrong before, too.
A few years ago, Zuckerberg proclaimed that
Facebook’s future was video, and it pushed live
video zealously. It wasn’t the only company bet-
ting on the format, either. While hardly a lop, live
video hasn’t taken over the world, and Facebook
stopped avidly urging people to record and broad-
cast their lives in real time online.
There are echoes of Facebook’s live video play-
book when it talks about stories. That should give
company watchers a nervous twinge.
At a Sept. 26 press conference, Facebook exec-
utives touted rapid adoption of stories by people
using Facebook, Instagram, and its other apps and
the compelling early results companies were see-
ing from ads in story form. It was a strong pitch.
Facebook said 300 million users see or make a story
on Facebook or Messenger every day.
Of course, in Facebook’s world, 300 million peo-
ple aren’t that many. An average of 1.5 billion use
the original site or Messenger each day, and given
how avidly the company is trying to steer people to
stories, it’s underwhelming that 20 percent of those
daily users see or make one. Facebook said in July
that 400 million people had some interaction with
Instagram stories, a more impressive 40 percent or
so of the service’s daily users.
But popularity can, like the stories themselves,
be ephemeral. There have been reports that Snap
Inc. has experienced stagnation with its story for-
mat. And Facebook had similar positive messages
about live video a couple of years ago. It stressed the
format with advertisers and told them people were
far more likely to watch a commercial message live
than prerecorded. It trumpeted the booming use of
live video by Facebook users. In early 2017 the com-
pany said 1 in 5 videos on Facebook was live. That’s
about the same share of Facebook or Messenger
users now watching or making stories.
Just because the playbooks are similar doesn’t
mean stories will fall of Facebook’s priorities list
the way live video has. But the data security blow-
back from panicked investors is a useful warning:
The company, which took years to start building a
real business model, then more years to catch up
on mobile devices, doesn’t have the forgiving run-
way it used to.
—Shira Ovide, Bloomberg Opinion
THE BOTTOM LINE Facebook’s response to a recent hack
seems to have been good by its standards, but the security flaw is a
distraction in the company’s eforts to work stories into its strategy.
Immigrants
Welcome
○ While Trump killed a visa program for startup
founders, a dozen countries have widened their doors
A master’s degree from Yale and angel invest-
ments in his startup weren’t enough to protect
Mezyad AlMasoud from President Trump. A lit-
tle more than a year ago, Trump moved to kill
a nascent visa program meant speciically for
company founders with capital in hand, such
○ Facebook says
the security flaw it
disclosed on Sept. 28
afected almost
50m
user accounts
1Q ’16
2Q ’18
24
12
0
Live video Stories
Mentions by Facebook executives on quarterly earnings calls*
A Pivot From Video