Do Facebook’s current problems -- including potential advertising slowdown -- mean good news for TV networks, especially in this upfront ad market? Not that much.
An eye-opening 19% decline of Facebook’s stock on Thursday — which lost just over a historic $100 billion in market value due to lower-than- expected revenue results — had many wondering if Facebook’s main platform is in trouble, from an advertising point of view.
MoffettNathanson Research said Facebook’s second-quarter revenues came in 2% lower than expected — to $13.0 billion — under its $13.3 billion projection.
This is partly attributable to high-profile consumer data breaches — specifically the Cambridge Analytica scandal regarding the 2016 presidential election — which have made advertisers cautious.
Still, it did not affect Facebook’s prospects — especially its stock price. And then there was yesterday.
Beneath the surface, Facebook has some changing dynamics: Lower overall usage of its Newsfeed area, while its Stories platform is growing.
The problem here is that advertising for Stories — the newer format for sharing videos and pictures, where images typically disappear after 24 hours — are priced lower than Newsfeed. In addition, more users are expected to opt out of targeted advertising.
Will any of this bring positive news for traditional TV media, possibly for TV news networks? That would be a tough line to draw — even considering that more than 60% of all social-media consumers still get some of their news from social media platforms, like Facebook.
TV selling executives might tell you a different story.
For the current TV market, they will point to digital media ongoing issues of privacy, transparency and fraud as reasons TV networks have posted strong ad volume gains in the recent upfront.
With reference to video advertising, analysts are wondering where Facebook’s investment in video content is headed. Analysts believe at some point this will affect traditional TV and video platforms -- especially news-like information TV networks.
For many, Facebook has a big upside -- despite getting dinged this week. Its second-quarter revenue gain was up a still massive 42% versus the same period a year ago. This is estimated to be followed by a smaller 33% increase in the third quarter, and 25% for the fourth, according to MoffettNathanson Research.
Compared this with possible overall highly optimistic TV upfront gains of 3% to 4%, depending on the specific TV network group.
In this light, who really looks good here?
TV networks will point to more premium, highly awareness-driven, brand-centric advertisers. Facebook will say there are big gains to be made with small- to mid-size marketers.
The battle for media spin, consumer attention, ROI and safety is only beginning. Keep your eye on stunning stock market declines among big digital media players.