Facebook Registers Small Dip In User Time

The time people spend on Facebook is declining -- and CEO Mark Zuckerberg says that’s a good thing.

During the fourth quarter, total time spent declined by 5%, which amounted to about 50 million hours, daily, Zuckerberg revealed on Wednesday.

Zuckerberg said the decline was a direct result of ongoing changes to Facebook’s News Feed, which include promoting more “meaningful” content and user engagement, while discouraging passive video viewing and lower quality content.

“The most important driver of our business has never been about time spent itself,” Zuckerberg told analysts on Facebook’s fourth-quarter earnings call. “By focusing on meaningful connections, our community and business will be stronger over the long term,” he insisted. 

At least in the short term, Zuckerberg admits all the changes to Facebook’s flagship service would “significantly impact our profitability.”

That did not appear to be the case in the fourth quarter, however. Beating analysts’ estimates, the social giant reported revenue of$12.97 billion for the period.

Yet, Facebook watchers says it is too early to see how the network’s News Feed changes will impact its bottom line.

“We won’t have visibility into these [sorts of] questions probably until Facebook’s Q1 or Q2 earnings later this year,” suggested Eric Berry, CEO of ad startup TripleLift.

The sense among some analysts and marketers is that Facebook’s enormous size and unrivaled market position with shield the company during its content realignment.

“Our interactions with marketers suggests that any concerns they have can still be alleviated by Facebook’s sheer scale and its relative utility vs. alternatives in digital media,” Pivotal Research Group’s Brian Wieser said in a note to investors.

“Facebook likely has a significant amount of pricing power, although some share -- probably a large minority -- will be price sensitive, meaning that less ad inventory will contribute to a deceleration in 2018,” Wieser suggested.

During the fourth quarter, mobile advertising revenue represented approximately 89% of total ad revenue -- up from approximately 84% of total ad revenue in the fourth quarter of 2016.

On average, daily active users (DAUs) hit 1.4 billion in December -- an increase of 14% year-over-year. As of December, monthly active users (MAUs) hit 2.13 billion -- also an increase of 14% year-over-year. 

In the United States and Canada, however, Facebook’s DAUs actually declined for the first time in the company’s history -- from 185 million in the third quarter of 2017 to 184 million in the fourth quarter of the year.

At the risk of short-term profits, Facebook is clearly taking efforts to clean up its network seriously. Just this week, the tech titan decided to ban any and all ads pushing cryptocurrencies like Bitcoin.

While not all cryptocurrencies may be deceptive or harmful, there are just too many bad actors using the promise of digital riches to mislead and defraud unsuspecting consumers, Facebook decided.

As part of Zuckerberg’s push for greater authenticity, Facebook also recently began cracking down on solicitors of “likes,” shares and other types of phony engagement. It’s what Facebook calls “engagement bait,” or the manipulation of its News Feed algorithm in order to boost engagement and achieve greater reach.

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