About two months ago, a senior Facebook (FB) exec predicted that social sharing via the company’s various “stories” products would surpass sharing via its news feeds at some point in 2019.

Yet for the moment, the revenue produced by these Snapchat Stories clones appears to be a tiny fraction of the collective revenue that Facebook gets from its main news feed and (to a lesser extent) Instagram’s feed. That spells a major long-term opportunity, and — depending on how fast it moves — could provide Facebook with a way to appease advertisers upset about rising news feed ad prices.

On Thursday, Instagram disclosed that it now has over 400 million daily active users (DAUs) for Instagram Stories, which launched in the summer of 2016. That’s up from 300 million in November, and equal to 40% of Instagram’s 1 billion-plus monthly active users (MAUs).

Facebook is a holding in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells FB? Learn more now.

The figure is also more than twice the 191 million Snapchat DAUs that Snap Inc. (SNAP)  reported having as of March. Snap’s DAU figure, it should be noted, also covers Snapchat users who don’t use Snapchat Stories.

Instagram’s disclosure came a couple months after it was learned that WhatsApp’s stories product, known as Status, had surpassed 450 million DAUs less than 18 months after its early-2017 launch. That’s nearly a third of the 1.5 billion MAUs WhatsApp claimed as of January.

Facebook Stories, which runs within the core Facebook app and Messenger, has seen more modest success. Nonetheless, it claimed 150 million DAUs as of May; usage picked up some after Facebook began letting users cross-post Instagram Stories content to Facebook Stories last fall.

There are a few different reasons why both the sharing and consumption of stories content has blown up so quickly. Chief among them are:

  1. The content typically disappears within 24 hours, at least unless a user doesn’t want it to. That encourages the sharing of material that a user would be nervous about permanently attaching to his or her profile.
  2. The content is mobile-friendly, with photos and videos generally appearing in portrait mode.
  3. The photo and video-centric nature of stories content makes it a good complement — if not an antidote — to more text-heavy social feeds.
  4. As its name implies, the format lends itself well to crafting stories about a user’s life, provided (as many younger consumers are) he or she is comfortable sharing a lot about it.

The media-centric nature of stories content also makes it a great fit for video ads. Snap is believed to get the majority of its ad revenue from its Snap Ads — video ads that run against Snapchat Stories material, often from publishers. And though Facebook COO Sheryl Sandberg has cautioned that it’s still early days, traction appears to be growing for Instagram Stories ads (they became available last year).

In Q1, Instagram Stories began supporting “carousel” ads that let users view up to three photos or videos by swiping. Instagram also recently rolled out its IGTV video platform. Though separate from Instagram Stories and meant to showcase longer professional content that’s permanently shared, IGTV’s emphasis on portrait-mode material should let it appeal to a lot of the same advertisers that are drawn to Instagram Stories and Snapchat Stories.

And with Facebook widely expected to step up its efforts to generate revenue from its still-lightly-monetized messaging apps, running ads against WhatsApp Status content gives Facebook a way to monetize the world’s most popular messaging app without seriously upending its trademark no-frills user experience. Already, Facebook execs are talking about WhatsApp’s potential to become a major ad platform in emerging markets where a relatively small number of businesses advertise on Facebook’s main news feed.

In more mature Facebook ad markets, meanwhile, stories products in general could do a lot to open up badly-needed ad inventory. As Facebook ad budgets have kept rising and the company has stopped significantly upping its news feed ad load, Facebook’s average ad price has soared. It rose 39% annually in Q1, after rising 43% in Q4 2017. That, in turn, has led to some vocal griping among Facebook ad buyers.

Showing more ads on Instagram’s main feed, whose ad load still appears to be below that of the Facebook news feed, could help address this supply crunch. Facebook’s attempts to show non-stories display and video ads within Messenger also can’t hurt.

But over the long run, considering how much stories viewing has exploded and how video-friendly the platform is, there’s a good chance that stories will serve as Facebook’s best vehicle for growing ad supply — and with it, ad revenue.





READ SOURCE

SHARE

LEAVE A REPLY

Please enter your comment!
Please enter your name here