Just when you thought Facebook (NASDAQ: FB) was running out of places to put ads, the company seems to be more creative than ever about coming up with new places to put them and new methods to monetize its services. Over the last few days, Facebook introduced three new features that could eventually morph into meaningful monetization strategies for the social network:
- Long-form video on Instagram, where the company hopes it can eventually run video ads
- A new subscription option for Facebook Groups
- Autoplay video ads within Facebook Messenger
The three major new features highlight Facebook’s ability to quickly deploy meaningful new ad products, strengthening the case for more strong advertising revenue growth in the years to come.
Here’s what investors should know about these new features.
Longform video on Instagram
On Wednesday, Facebook’s photo- and video-sharing app Instagram said it is rolling out a new feature for watching long-form video within Instagram, as well as an entirely new app for the new feature.
The new feature is called IGTV — and its dedicated app goes by the same name. Designed specifically for a mobile experience, videos in IGTV are vertical. Combining this with the removal of Instagram’s typical one-minute limit for video, IGTV offers a highly immersive experience that should appeal both to creators and marketers.
While IGTV seems to be designed specifically to attract high-dollar TV advertising budgets, investors will have to wait to see how marketers embrace the new medium, as the new feature isn’t featuring ads yet. But ads are likely on the horizon for IGTV, said Instagram CEO Kevin Systrom in a press conference (via The Wall Street Journal) about the new feature. “That is obviously a very reasonable place to end up,” said Systrom. “And if we end up in that place, which we think we will, there will obviously be a way for creators to make a living.”
The announcement came just as Instagram reached the 1 billion monthly active users milestone, making the app Facebook’s fourth platform with 1 billion or more monthly active users.
Subscriptions for Facebook Groups
Facebook also announced on Wednesday that it is pilot testing a new tool for Facebook Group administrators, allowing them to create subscription options for some of these members.
Beyond enabling Group administrators to increase engagement with members and earn money, a subscription model means Facebook can test a monetization method beyond its advertising model. If subscriptions go well within Groups, Facebook could consider rolling out similar monetization methods within other products.
Facebook has recently been investing in helping users connect in Groups that encourage more meaningful interaction. Currently, about 200 million Facebook users belong to “meaningful” groups, Facebook said in its first-quarter shareholder letter. The company is aiming for 1 billion people to belong to meaningful groups. Subscriptions can help Group administrators better monetize their groups. As administrators reinvest more resources and improve the quality of their groups, this could ultimately help Facebook in its mission to attract more users to those groups.
Autoplay video ads in Messenger
Facebook is beginning to put autoplay video ads inside of Facebook Messenger, the company announced at the Cannes Lions advertising festival this week. Since Messenger is an even bigger service than Instagram, with 1.3 billion monthly active users, the introduction of video ads could serve as a significant catalyst for Facebook.
Not only is video a “mega trend” for Facebook overall, but Messenger is home to significant user engagement. Between WhatsApp and Messenger, about 100 billion messages are sent every day, Facebook said in its most recent earnings call. Autoplay video ads, which have proved to be very successful in the Facebook News Feed, will help Facebook take advantage of Messenger’s growing usage.
All three of these new features look poised to help Facebook keep up its strong revenue growth.
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