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What To Watch Out For From Facebook In 2014
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Prediction: 2014 will be a big year for Facebook.
That's a truism, of course, because the social network has more than 1 billion members: every year will be a big year for Facebook.
Having said that, if you're interested in how the service will evolve, how the stock will perform, and where CEO Mark Zuckerberg wants to take the app in the future, these are the issues you should keep an eye on.
Bored teens, ‘Facebook is dead,’ and the Mom Problem.
This problem is more about PR than substance. But Facebook and Zuckerberg can be lightning rods for the media, so Facebook's spin masters will be working fiercely in 2014 to stay in front of this. The issue is simple: Facebook has admitted that some teens have started to use Facebook less. Those teens are saying things like "Facebook is dead." Moms are to blame: Teens — who frequently fuel the growth of the mobile world's hot new things — hate being in environments where their parents can see what they're up to. (That's why they love the disappearing messages of Snapchat.)
In terms of substance, however, Facebook is actually more likely to see continued growth in new monthly active users. Many of those users are overseas, and are older. But they are still real people doing real things on the platform. CEO Mark Zuckerberg has already begun to make the case that Facebook is no longer interested in being cool, and is more interested in being like Google — a sort of online utility that helps people connect when they need to.
Snapchat CEO Evan Spiegel already said no to Zuck.
Facebook is acquisitive and will make some dramatic M&A moves in 2014.
We already know Facebook is in the market to buy other companies. It reportedly offered $3 billion for Snapchat earlier this year but was rebuffed. In 2013 it acquired GazeHawk, Onavo, Microsoft Atlas, SportStream, and — most importantly, in some ways — the mobile app development platform Parse.
The strategy? A big part of Facebook's future lies with things that are not Facebook. Instagram is the best example. Some mature users might be bored of Facebook, but Instagram is currently cool. If Facebook can surround itself with addictive apps it won't "lose" users to competitors — it will own the competitors. (Hence the Snapchat offer.)
Tip: Some people think Facebook might move to acquire Foursquare.
Yann LeCun, Facebook's new machine learning chief.
Facebook wants to be a leader in Artificial Intelligence, speech recognition and machine learning.
This is one of the least-understood aspects of Facebook's strategy for the future: It doesn't just want to be a place for status updates and family photos. Rather, it wants to use its vast trove of consumer data to power intelligent search and response software that can speak with you the way the computers do on Star Trek. ("Computer! Update my status with this duckface selfie!") Facebook recently hired a machine learning guy to head up that effort. Facebook is a key player in the "semantic" (or intelligent) search race.
Facebook's huge mobile messaging problem.
Messaging is huge on mobile. Messages — text SMS, iMessage, Snapchat, Whatsapp, Kik, Instagram Direct, Kakao, WeChat — are the big, monetizable growth area of mobile apps. They're basically as "sticky" as email once was on desktop: Once you're embedded in a mobile message system it's hard to persuade you to leave for a competitor because all your contacts are in there, and people hate transferring their contacts. Messaging apps like Whatsapp use wifi, and therefore don't impinge on customers' data download charges the way texting does. But the messaging revolution is (somewhat) passing Facebook by. Whatsapp has 400 million users. Twitter, with 240 million users, is revamping its direct messaging system. Instagram just introduced direct messages (thus shoring up some users against an exodus to Snapchat). Snapchat has 30 million active users. Facebook Messenger is a really good app ... but who uses it?
Again, this is why Facebook wanted to buy Snapchat. All signs point to Facebook acquiring the first hot new messaging app that says yes.
Fixing the News Feed.
Facebook is forever tinkering with its news feed, the central river of stuff that you see on Facebook. It tweaked its algorithm in a way that hurt advertisers back in October 2012, by reducing the "reach" of their posts among their fans. It then introduced a bumping mechanism to re-surface older but more interesting posts, in a way that hurt posts that were newer but more boring. Then in December 2013 it tweaked the feed again to favor news posts over branded fluff. Facebook's news feed is so unwieldy — 1500 posts per day per person — it has become a major software engineering problem. We hear that in 2014, Facebook will become even more news-oriented as it battles for relevance with Twitter.
Whatever happens, Facebook will never stop tweaking your feed. It is the most important part of Facebook. Expect the feed to "learn" what you personally like more in 2014.
Michael Seto / BI
Facebook ad sales chief Carolyn Everson
Advertising: The battle for TV dollars begins in earnest.
Facebook will launch autoplay video ads in 2014. It promises they will reach an audience bigger than prime time TV's. Facebook is particularly keen to puncture all the buzz Twitter has gotten around the way its users tweet during TV shows. Watch for Facebook to up its game in terms of TV advertising-related ventures.
One obvious problem: No one wants to see cheesy, low-rent autoplay ads in their news feed. So Facebook will need to creatively curate video ads on brands' behalf — and reject companies that don't "get it." And if Facebook doesn't do that ... then that will be just as big a story.
Illustration: Ellis Hamburger
Extending the internet to all.
When you've got a user base in the billions, you can only get growth from projects that get more users in the billions. And that means bringing online the two-thirds of humans who have yet to access the web. Zuckerberg's Internet.org effort looks like a worthy cause — and it is.
But it segues nicely with Facebook's need for growth in countries where billions of people are not yet on Facebook.
More ugly lobbying.
One of the more depressing aspects of Facebook's transition from tech startup to giant corporation has been its adoption of aggressive, and often conservative, political lobbying tactics. Facebook wants to reform immigration so it can get access to more foreign tech workers. In its pursuit of that goal, it has struck agreements to support the politicians who want drilling in the Alaska National Wildlife Refuge, and the Keystone XL pipeline to be built from Alaska to the Gulf of Mexico.
It was a short distance from connecting college students with their friends to supporting Big Oil. Expect more unsightly leaps in 2014.
The stock: North of $60?
Facebook is trading at ~$55 but Wall Street wants to see it top $60. Facebook's financials face some tough comps in 2014, because 2013 was a great year for Facebook. Whether Facebook has enough tricks up its sleeve to do that is an open question. Video ads are part of the solution. But the off-Facebook, Atlas-driven web ad network that would really boost revenue looks like it's a long way away.
Disclosure: The author owns Facebook stock.
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