Published: Sun, January 14, 2018
Hi-Tech | By Wayne Curry

Facebook -5.6% as analysts weigh financial hit from news changes

Facebook -5.6% as analysts weigh financial hit from news changes

Since then, annual sales have soared from US$5.1 billion to an estimated US$40.2 billion previous year - and the news feed has become increasingly crowded with advertisements and posts from brands and publications.

Zuckerberg said on Thursday that he is changing the goals given to the product teams from stressing on the need to help people in finding the relevant content to assisting people in having more healthy and meaningful social interactions.

Facebook founder and CEO Mark Zuckerberg. The move seeks to encourage more meaningful interactions between users and their friends and online contacts.

Zuckerberg said in a post on Facebook that the changes would be "major" and lead to a short-term drop in the time spent on the network, but that it would be better for users and for the business over the long term. "But I also expect the time you do spend on Facebook will be more valuable".

With this change, Facebook aims give its users a prime spot.

According to some analysts, the measure won't drag Facebook down due to its strong monetization, formed by a monthly active user (MAU) base of more than 2 billion. But one of the ways Facebook could still drive higher ad revenue is to increase the amount of time spent on Facebook, thus increasing the number of chances users have to see ads. It's not just Facebook's attempt to end its fake news problem.

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As we make these updates, Pages may see their reach, video watch time and referral traffic decrease. Fewer videos in the feed could offset lower engagement levels.

Meanwhile, investors and advertisers are likely to be anxious by a line in Zuckerberg's Facebook post announcing the changes.

Facebook drives about 17 per cent of the visits to the websites of companies participating in Digital Content Next, a group that represents publishers including Bloomberg News, CNBC, 21st Century Fox and Al Jazeera, said Jason Kint, chief executive of the organisation. (You should note: They are not lavished with money to do this.) But a larger concern is that you're going to be less involved in the information that makes this community operate. If Zuckerberg really wants to make Facebook a more hospitable place, he can start by shedding light on one of its most unsettling features. The average price per impression climbed 35% last quarter.

He believes Facebook will still push ads to people who have clicked on other ads or already follow a page or company. If users pay more attention to advertisements in their feeds following the upcoming changes, those returns may improve further, prompting advertisers to pay even more per impression.

Facebook took a look at their mountain of data and made that decision for you, replacing publisher content with something that evokes ever-more extreme emotions rather than serious interest in what is actually happening around you.

Tom and David just revealed their ten top stock picks for investors to buy right now. The Motley Fool owns shares of and recommends Facebook.

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