Facebook News Feed update will make Facebook rich(er)

8 years ago by in Business Tagged:


The changes to Facebook’s news feed are guaranteed to improve user engagement but it also lays the groundwork for advances in the Facebook’s approach to advertising by developing new advertising channels within Facebook the company will use to improve targeted advertising.

Granted the change to the news feed wasn’t made specifically for advertising purposes, users have long complained that the news feed was too cluttered. To help reduce the feeling of being overwhelmed with content Facebook originally they took a engineering approach by optimizing user feeds with EdgeRank.

Edgerank is was the public calls Facebook’s secret recipe used to guess what content is important to you. But it doesn’t always work. The concept of edgerank is flawed because it effectively takes a binary user decision as to whether or not they want to view content and assigns a score to it. The score, which the user isn’t even aware of, decides whether or not they see the content. With Edgerank the conscious decision you made when you agreed to follow a person or brand is less important than the computed decision made by Facebook.

The end result is that users feel frustrated when they don’t see content from friends they follow and brands feel frustrated when their content doesn’t show to all the users following them. While Facebook made no mention of changes edgerank in their latest announcement, the new news feed is a design solution to this problem.

Facebook made two major changes to the way content appears in the news feed. The first is that feeds are categorized. A benefit to those who haven’t taken the time to categorize and group friends, something done only by the heaviest of users. The grouping allowed you to have separate feeds for the group of individuals you created, but most users didn’t know about this functionality or simply didn’t use the site enough to bother creating categorized feeds. Facebook is now going to do this automatically for you for the more popular categories of content users might be interested in.

In the new design there will be the News Feed, which is the normal edgerank based feed, most recent, which ignores edgerank and simply shows you the recent post. Remember, edgerank often filters out the most recent post if it decided its not relevant to you…weird eh? All Friends, is just a feed of your friends, minus the brands. Photos, Games, Music and more important “Following” are focused groupings. “Following” shows the brands that you are following. So if you want to see news posted by the publishers or brands you like most, this will be the short cut.

Facebook calls these categories feeds, but I like to think of them as channels. The reason I like the channel analogy is because these are effectively advertising channels that will affect advertising on Facebook in the near future.

For example, when I promote a post to my friends, will it be promoted in the friends section or will it be promoted in the primary news feed? When a brand decides to promote a post its likely that Facebook will now have different pricing and more detailed targeting depending on the feed that the content will be promoted in.

The second major change has been that content now takes a much more visual approach. If you use Facebook on your smartphone then the new design will feel familiar. They have moved away from a text focus to a photo focus, a trend that has gained more traction across all of the web but has missed Facebook’s news feed desktop design, which hasn’t been updated in two years.

Normally when something appeared in your feed it appeared as a text caption with a small thumbnail of the photo associated with the post, now the image associated with the post will take up the majority of the screen space with a excerpt of the content associated with the post and a thread of discussion around the content.

For publishers these changes present a significant improvement and will likely result in increased page views for those pushing engaging content to Facebook. For users this should make it easier to visually identify content you might be interested in. It also means that users will be free to like brands they are interested in without worrying about brands cluttering out content from their friends on the primary news feed.

The news feed is the single most important functionality to Facebook’s business. Advertising is responsible for more than 84% of the company revenue. Advertising is driven by interaction within the news feed, Facebook figured out how to improve engagement when it redesigned its mobile interface and mobile advertising is now responsible for nearly 1/3rd of the company revenue. In fact, mobile advertising revenue recently doubled from the 3rd quarter to the 4th.

Because Facebook charges advertisers based on engagement and the news feed hasn’t been changed in two years, if this news feed change succeeds in improving user engagement then I expect Facebook advertising revenue to increase dramatically. Revenue per quarter should grew from 1.3B to 2.5B by the end of the second quarter. This is my prediction lets see how it plays out. If you want to try the new Facebook news feed before it rolls out to everyone else, join the wait list at https://www.facebook.com/about/newsfeed