Facebook taps banks, but for chatbots not purchase data like Google

Facebook taps banks, but for chatbots not purchase data like Google

Backlash swelled this morning after Facebook’s aspirations in financial services were blown out of proportion by a Wall Street Journal report that neglected how the social network already works with banks. Facebook spokesperson Elisabeth Diana tells TechCrunch it’s not asking for credit card transaction data from banks and it’s not interested in building a dedicated banking feature where you could interact with your accounts. It also says its work with banks isn’t to gather data to power ad targeting, or even personalize content such as which Marketplace products you see based on what you buy elsewhere.

Instead, Facebook already lets Citibank customers in Singapore connect their accounts so they can ping their bank’s Messenger chatbot to check their balance, report fraud or get customer service’s help if they’re locked out of their account without having to wait on hold on the phone. That chatbot integration, which has no humans on the other end to limit privacy risks, was announced last year and launched this March. Facebook works with PayPal in more than 40 countries to let users get receipts via Messenger for their purchases.

Expansions of these partnerships to more financial services providers could boost usage of Messenger by increasing its convenience — and make it more of a centralized utility akin to China’s WeChat. But Facebook’s relationships with banks in the current form aren’t likely to produce a steep change in ad targeting power that warrants significant heightening of its earning expectations. The reality of today’s news is out of step with the 3.5 percent share price climb triggered by the WSJ’s report.

“A recent Wall Street Journal story implies incorrectly that we are actively asking financial services companies for financial transaction data – this is not true. Like many online companies with commerce businesses, we partner with banks and credit card companies to offer services like customer chat or account management. Account linking enables people to receive real-time updates in Facebook Messenger where people can keep track of their transaction data like account balances, receipts, and shipping updates,” Diana told TechCrunch. “The idea is that messaging with a bank can be better than waiting on hold over the phone – and it’s completely opt-in. We’re not using this information beyond enabling these types of experiences – not for advertising or anything else. A critical part of these partnerships is keeping people’s information safe and secure.”

Diana says banks and credit card companies have also approached it about potential partnerships, not just the other way around as the WSJ reports. She says any features that come from those talks would be opt-in, rather than happening behind users’ backs. The spokesperson stressed these integrations would only be built if they could be privacy safe. For example, signing up to use the Citibank Messenger chatbot requires two-factor authentication through your phone.

But renewed interest in Facebook’s dealings with banks comes at a time when many are pointing to its poor track record with privacy following the Cambridge Analytica scandal, where people were duped into volunteering the personal info of them and their friends. Facebook hasn’t had a big traditional data breach where data was outright stolen, as has befallen LinkedIn, eBay, Yahoo [part of TechCrunch’s parent company] and others. But users are rightfully reluctant to see Facebook ingest any more of their sensitive data for fear it could leak or be misused.

Facebook has recently cracked down on the use of data brokers that suck in public and purchased data sets for ad targeting. It no longer lets data brokers upload Managed Custom Audience lists of user contact info or power Partner Categories for targeting ads based on interests. It also more adamantly demands that advertisers have the consent of users whose email addresses or phone numbers they upload for Custom Audience targeting, though Facebook does little to verify that consent and advertisers could still buy data sets from brokers and upload them themselves

Facebook’s statement today shows more scruples than Google, which last year struck ad measurement data deals with data brokers that have access to 70 percent of credit and debit card transactions in the U.S. That led to a formal complaint to the FTC from the Electronic Privacy Information Center. [Correction: Google tells us the deals are for ad measurement data, not ad targeting as we originally published. It only learns the annonymous aggregate purchase value, not what the items were bought, and the data is encrypted.]

Cambridge Analytica has brought on an overdue era of scrutiny regarding privacy and how internet giants use our data. Practices that were overlooked, accepted as industry standard or seen as just the way business gets done are coming under fire. Internet users aren’t likely to escape ads, and some would rather have those they see be relevant thanks to deep targeting data. But the combination of our offline purchase behavior with our online identities seems to trigger uproar absent from sites using cookies to track our web browsing and buying.

Facebook’s probably better off backing away from anything that involves sensitive data like checking account balances until Cambridge Analytica blows over and it’s proven its newfound sense of responsibility translates into a safer social networking. But at least for now, it’s not slurping up our banking data wholesale.

Source: Mobile – Techcruch

Why unskippable Stories ads could revive Facebook

Why unskippable Stories ads could revive Facebook

Prepare for the invasion of the unskippables. If the Stories social media slideshow format is the future of mobile TV, it’s going to end up with commercials. Users won’t love them. And done wrong they could pester people away from spending so much time watching what friends do day-to-day. But there’s no way Facebook and its family of apps will keep letting us fast-forward past Stories ads just a split-second after they appear on our screens.

We’re on the cusp of the shift to Stories. Facebook estimates that across social media apps, sharing to Stories will surpass sharing through feeds some time in 2019. One big reason is they don’t take a ton of thought to create. Hold up your phone, shoot a photo or short video and you’ve instantly got immersive, eye-catching, full-screen content. And you never had to think.

Facebook CPO Chris Cox at F8 2018 charts the rise of Stories that will see the format surpass feed sharing in 2019

Unlike text, which requires pre-meditated reflection that can be daunting to some, Stories are point and shoot. They don’t even require a caption. Sure, if you’re witty or artistic you can embellish them with all sorts of commentary and creativity. They can be a way to project your inner monologue over the outside world. But the base level of effort necessary to make a Story is arguably less than sharing a status update. That’s helped Stories rocket to more than 1.3 billion daily users across Facebook’s apps and Snapchat.

The problem, at least for Facebook, is that monetizing the News Feed with status-style ads was a lot more straightforward. Those ads, which have fueled Facebook’s ascent to earning $13 billion in revenue and $5 billion in profit per quarter, were ostensibly old-school banners. Text, tiny photo and a link. Advertisers have grown accustomed to them over 20 years of practice. Even small businesses on a tight budget could make these ads. And it at least took users a second to scroll past them — just long enough to make them occasionally effective at implanting a brand or tempting a click.

Stories, and Stories ads, are fundamentally different. They require big, tantalizing photos at a minimum, or preferably stylish video that lasts five to 15 seconds. That’s a huge upward creative leap for advertisers to make, particularly small businesses that’ll have trouble shooting that polished content themselves. Rather than displaying a splayed out preview of a link, users typically have to swipe up or tap a smaller section of a Story ad to click through.

And Stories are inherently skippable. Users have learned to rapidly tap to progress slide by slide through friends’ Stories, especially when racing through those with too many posts or that come from more distant acquaintances. People are quick with the trigger finger the moment they’re bored, especially if it’s with an ad.

A new type of ad blindness has emerged. Instead of our eyes glazing over as we scroll past, we stare intensely searching for the slightest hint that something isn’t worth our time and should be skipped. A brand name, “sponsored” label, stilted product shot or anything that looks asocial leads us to instantly tap past.

This is why Facebook COO Sheryl Sandberg scared the hell out of investors on the brutal earnings call when she admitted about Stories that, “The question is, will this monetize at the same rate as News Feed? And we honestly don’t know.” It’s a radically new format advertisers will need time to adopt and perfect. Facebook had spent the past year warning that revenue growth would decelerate as it ran out of News Feed ad inventory, but it’d never stressed the danger as what it was: Stories. That contributed to its record-breaking $120 billion share price drop.

The shift from News Feed ads to Stories ads will be a bigger transition than desktop ads to mobile ads for Facebook. Feed ads looked and worked identically, it was just the screen around them changing. Stories ads are an entirely new beast.

Stories ads are a bigger shift than web to mobile

There is one familiar format Stories ads are reminiscent of: television commercials. Before the age of TiVo and DVRs, you had to sit through the commercials to get your next hit of content. I believe the same will eventually be true for Stories, to the tune of billions in revenue for Facebook.

Snapchat is cornered by Facebook’s competition and desperate to avoid missing revenue estimates again. So this week, it rolled out unskippable vertical video ads it actually calls “Commercials” to 100 more advertisers, and they’ll soon be self-serve for buyers. Snap first debuted them in May, though the six-second promos are still only inserted into its longer-form multi-minute premium Shows, not user-generated Stories. A Snap spokesperson said they couldn’t comment on future plans. But I’d expect its stance will inevitably change. Friends’ Stories are interesting enough to compel people to watch through entire ads, so the platform could make us watch.

Snapchat is desperate, and that’s why it’s already working on unskippable ads. If Facebook’s apps like Instagram and WhatsApp were locked in heated battle with Snapchat, I think we’d see more brinkmanship here. Each would hope the other would show unskippable ads first so it could try to steal their pissed-off users.

But Facebook has largely vanquished Snapchat, which has seen user growth sink significantly. Snapchat has 191 million daily users, but Facebook Stories has 150 million, Messenger Stories has 70 million, Instagram Stories has 400 million and WhatsApp Stories (called Status) leads with 450 million. Most people’s friends around the world aren’t posting to Snapchat Stories, so Facebook doesn’t risk pushing users there with overly aggressive ads, except perhaps amongst U.S. teens.

Instagram’s three-slide Stories carousel ads

That’s why I expect we’ll quickly see Facebook start to test unskippable Stories ads. They’ll likely be heavily capped at first, to maybe one to three per day per user. Facebook took a similar approach to slowly rolling out auto-play video News Feed ads back in 2014. And Facebook’s apps will probably only show them after a friend’s story before your next pal’s, in-between rather than as dreaded pre-rolls. Instagram already offers carousel Stories ads with up to three slides instead of one, so users have to tap three times to blow past them.

An Instagram spokesperson told me they had “no plans to share right now” about unskippable ads, and a Facebook spokesperson said “We don’t have any plans to test unskippable stories ads on Facebook or Instagram.” But plans can change. A Snap spokesperson noted that unlike a full 30-second TV spot, Snapchat’s Commercials are up to six seconds, which matches an emerging industry trend for mobile video ads. Budweiser recently made some six-second online ads that it also ran on TV, showing the format’s reuseability that could speed up adoption. For brand advertisers not seeking an on-the-spot purchase, they need time to leave an impression.

By making some Stories ads unskippable, Facebook’s apps could charge more while making them more impactful for advertisers. It would also reduce the creative pressure on businesses because they won’t be forced to make that first split-second so flashy so people don’t fast-forward. Employing unskippable ads could also create an incentive for people to pay for a hypothetical ad-free Facebook Premium subscription in the future.

If Facebook makes the Stories ad format work, it has a bright future that contrasts with the doomsday vibes conjured by its share price plummet. Facebook has more than 5X more (duplicated) Stories users across its apps than its nearest competitor Snapchat. The social giant sees libraries full of Stories created each day waiting to be monetized.

Source: Mobile – Techcruch

Facebook launches Brand Collabs search engine for sponsoring creators

Facebook launches Brand Collabs search engine for sponsoring creators

Facebook wants to help connect brands to creators so they can work out sponsored content and product placement deals, even if it won’t be taking a cut. Confirming our scoop from May, Facebook today launched its Brand Collabs Manager. It’s a search engine that brands can use to browse different web celebrities based on the demographics of their audience and portfolios of their past sponsored content.

Creators hoping to score sponsorship deals will be able to compile a portfolio connected to their Facebook Page that shows off how they can seamlessly work brands into their content. Brands will also be able to find them based on the top countries where they’re popular, and audience characteristics like interests, gender, education, relationship status, life events or home ownership.

Facebook also made a wide range of other creator monetization announcements today:

  • Facebook’s Creator app that launched on iOS in November rolled out globally on Android today (this link should be active soon once the app populates across Google Play). The Creator app lets content makers add intros and outros to Live broadcasts, cross-post content to Twitter and Instagram, see a unified inbox of their Facebook and Instagram comments plus Messenger chats, and more ways to connect with fans.

  • Ad Breaks, or mid-video commercials, are rolling out to more U.S. creators, starting with those that make longer and original content with loyal fans. Creators keep 55 percent of the ad revenue from the ads.
  • Patreon-Style Subscriptions are rolling out to more creators, letting them charge fans $4.99 per month for access to exclusive behind the scenes content plus a badge that highlights that they’re a patron. Facebook also offers microtransaction tipping of video creators through its new virtual currency called Stars.

  • Top Fan Badges that highlight a creator’s most engaged fans will now roll out more broadly after a strong initial reaction to tests in March.
  • Rights Manager, which lets content owners upload their videos so Facebook can fingerprint them and block others from uploading them, is now available for creators not just publishers.

Facebook also made a big announcement today about the launch of interactive video features and its first set of gameshows built with them. Creators can add quizzes, polls, gamification and more to their videos so users can play along instead of passively viewing. Facebook’s Watch hub for original content is also expanding to a wider range of show formats and creators.

Why Facebook wants sponsored content

Facebook needs the hottest new content from creators if it wants to prevent users’ attention from slipping to YouTube, Netflix, Twitch and elsewhere. But to keep creators loyal, it has to make sure they’re earning money off its platform. The problem is, injecting Ad Breaks that don’t scare off viewers can be difficult, especially on shorter videos.

But Vine proved that six seconds can be enough to convey a subtle marketing message. A startup called Niche rose to arrange deals between creators and brands who wanted a musician to make a song out of the windows and doors of their new Honda car, or a comedian to make a joke referencing Coca-Cola. Twitter eventually acquired Niche for a reported $50 million so it could earn money off Vine without having to insert traditional ads. [Disclosure: My cousin Darren Lachtman was a co-founder of Niche.]

Vine naturally attracted content makers in a way that Facebook has had some trouble with. YouTube’s sizable ad revenue shares, Patreon’s subscriptions and Twitch’s fan tipping are pulling creators away from Facebook.

So rather than immediately try to monetize this sponsored content, Facebook is launching the Brand Collabs Manager to prove to creators that it can get them paid indirectly. Facebook already offered a way for creators to tag their content with disclosure tags about brands they were working with. But now it’s going out of its way to facilitate the deals. Fan subscriptions and tipping come from the same motive: letting creators monetize through their audience rather than the platform itself.

Spinning up these initiatives to be more than third-rate knockoffs of Niche, YouTube, Patreon and Twitch will take some work. But hey, it’s cheaper for Facebook than paying these viral stars out of pocket.

Source: Mobile – Techcruch

Facebook demands advertisers have consent for email/phone targeting

Facebook demands advertisers have consent for email/phone targeting

Facebook is hoping to avoid another privacy scandal by adding new accountability and transparency requirements for businesses that use its Custom Audiences too to target you with ads based on your email address or phone number. Starting July 2nd, advertisers will have to declare whether contact info uploaded for ad targeting was collected with proper user consent by them, one of their partners or both. Users will be able to see this info if they opt to block future ads from that business.

Companies can only share Custom Audiences info with partners like ad agencies if they’re formally connected through Facebook’s business manager tool. And Facebook will start to show advertisers reminders that they need consent for contact info ad targeting and force all users connected to an ad account to confirm these terms.

The new consent tool launch confirms TechCrunch’s scoop from March that Facebook would crack down on Custom Audiences targeting without consent. Facebook has always technically required consent, but it hasn’t necessarily done much to enforce those rules. That same approach to API rules produced the Cambridge Analytica debacle. Facebook began to safeguard Custom Audiences a few months ago when it blocked third-party data brokers like Datalogix and Acxiom from work with Facebook to upload data sets as Partner Categories that advertisers could target. But that still let businesses just upload the same data themselves.

[Update: Two days after the March announcement, Facebook also announced it would be shutting down Managed Custom Audiences, which let data brokers upload data sets on behalf of marketers. But in doing so, Facebook also formalized its policy that advertisers could still buy these data sets from data brokers and upload them themselves.]

Custom Audiences is one of Facebook’s most valuable revenue generators because it allows businesses to hit up their former customers to buy more. A scandal surrounding the targeting mechanism could be seriously detrimental to the social network’s business in a way that the rest of its recent public image problems haven’t, judging by the recovery of Facebook’s share price.

Since 2012, Facebook has offered Custom Audiences as a way for businesses to upload privacy-safe hashed lists of customer contact info. Facebook matches that against its users’ info to show them the business’ ads, rather than companies having to pay to try to reach those people through demographic targeting. That way, a company that already sold you a car and got your email signup could target you a few years later with ads to trade in and buy a new vehicle. Businesses can also use Facebook’s lookalikes targeting to reach people with similar characteristics to their existing customers.

Now at least Facebook will show this “Original Data Source” field asking who collected the uploaded phone numbers or emails. Users can check out this info if they click the “Why Am I Seeing This Ad?” button in the drop-down. However, Facebook stops short of scanning the lists for suspicious info, such as blocks of contact info that match hacked or purchased data sets.

That means Facebook is trusting advertisers to tell the truth about consent for targeting… despite them having a massive financial incentive to bend or break those rules. Today’s update will give Facebook more plausible deniability in the event of a scandal, and it might deter misuse. But Facebook is stopping short of doing anything to actually prevent non-consensual ad targeting.

Source: Mobile – Techcruch

Facebook finally monetizes Marketplace with ads from users and brands

Facebook finally monetizes Marketplace with ads from users and brands

Twenty months after launching its Craigslist competitor, Marketplace, and relentlessly promoting it with placement in the main navigation bar, Facebook will start earning money off its classifieds section. Facebook today begins testing Marketplace ads in the U.S. that let average users pay to “Boost” their listing to more people through the News Feed. While they’re easy for novices, requiring buyers to only set a budget and how long the ads will run, there are no additional targeting options beyond being shown to age 18+ users in nearby ZIP codes.

Meanwhile, yesterday Facebook announced that it’s launching product ads from businesses that appear within Marketplace. After quietly opening in the U.S. in January and testing in Canada in May, Marketplace ads are now official, and can be bought in those two countries plus New Zealand and Australia. Businesses can extend their existing News Feed, video, Instagram, Messenger and other ad campaigns to Marketplace, and more types of objective-based campaigns will open to the classifieds section soon.

Facebook lets brands show ads within Marketplace

The Boost ads could be a big help if you need to rapidly liquidate your furniture before moving out, or if you’re trying to sell something big at a high price, like Marketplace’s new car, housing, jobs and home services offerings. Yet they seem inefficient, since the lack of targeting means your listing for men’s jewelry might show up to women, or your rock climbing gear ads could show up to senior citizens.

Facebook’s new Boost ads let average users pay to show their Marketplace listings to more people

But Facebook does tell me that ads will be auto-optimized for clicks, so when people start to click your ads, Facebook will show them to people of similar demographics. It will also immediately pause your ad campaign if you mark your item as sold. Boost ads get entered in alongside traditional bids in Facebook’s auction system, which then display what it predicts will be the most appealing ads.

“Many Marketplace sellers have told us that they want the ability to show a listing to more people in their local area, especially if they’re trying to sell it quickly,” Facebook product manager Harshit Agarwal tells TechCrunch. “We’re starting to test a simple way for sellers to boost their listings and help them find a buyer.” For comparison, Craigslist doesn’t run any ads, but charges sellers $5 to $10 for certain product listings for cars and brokered apartments.

One interesting quirk is that Facebook says it won’t allow boosting of listings of political products such as a Bernie Sanders for President t-shirt, as its political advertiser verification and labeling system only works with Pages and not individuals right now.

The Boost ads will only appear to a small percentage of U.S. users and Facebook says it’s too early to know if it will roll them out further. But as the company seems bent on swallowing up every other essential part of the internet, anything that makes Marketplace more useful to sellers and lucrative for the tech giant seems like a good bet for an official launch.

Together, the two formats could unlock new revenue streams for Facebook at a time when it’s starting to run out of ad inventory in the News Feed. The company either needs to open new surfaces like Marketplace to ads, or get people and businesses to pay more to fill its dwindling feed space if it wants to keep Wall Street happy.

Source: Mobile – Techcruch

Facebook Stories reveals 150M daily viewers and here come ads

Facebook Stories reveals 150M daily viewers and here come ads

After 14 months of silence since launching, Facebook Stories has finally announced a 150 million daily active user count for its Snapchat Stories clone. And now it’s time to earn some money off it. Facebook Stories will start testing its first ads today in the U.S., Mexico and Brazil.

They’re 5- to 15-second video ads users can skip, and while there’s no click-through or call to action now, Facebook plans to add that in the coming months. Advertisers can easily extend their Instagram Stories ads to this new surface, or have Facebook automatically reformat their News Feed ads with color-matched borders and text at the bottom. Facebook also plans to give businesses more metrics on their Stories performance to convince them the feature is worth their ad dollars.

Advertisers can extend their Instagram Stories ads to Facebook Stories (left), or have Facebook reformat their News Feed ads with color-matched image borders and ad copy text shown at the bottom

Facebook has to nail Stories ads to preserve its business, as CPO Chris Cox said this month that Stories sometime next year will surpass feed posts as the top way to share. CEO Mark Zuckerberg warned that Facebook must ensure “that ads are as good in Stories as they are in feeds. If we don’t do this well, then as more sharing shifts to Stories, that could hurt our business.” Despite criticism that the feature is obtrusive and redundant with Instagram Stories, Facebook is proving there’s no retreating from the ephemeral slideshow format. And Snapchat could see ad spend slip over to Facebook, especially since the big blue social network has so much targeting data on us.

The race for storytellers

My first question was how Facebook is defining a daily user for Stories. It’s anyone who watches a Story on Facebook’s app or site. That’s useful, because it means it’s not counting users who simply cross-post their Stories from Instagram or Messenger to Facebook, which would inflate the number. It’s a testament to the coercive power of the top-of-feed Stories design that Instagram pioneered and Facebook brought over, and it’s already testing bigger Stories preview tiles.

For context, here’s a breakdown of Stories daily user counts and total monthly user counts across the top players, ranked by size:

  1. WhatsApp Status: 450 million daily out of 1.5 billion monthly as of May 2018
  2. Instagram Stories: 300 million daily out of 800 million monthly as of November 2017
  3. Snapchat (whole app): 191 million daily as of May 2018, launched
  4. Facebook Stories: 150 million daily out of 2.2 billion monthly as of May 2018
  5. Messenger Day/Stories: 70 million daily out of 1.3 billion monthly as of September 2017

Instagram Stories also started showing ads when it hit 150 million users, though that was just five months after launch, while it’s taken Facebook Stories 14 months to get there.

The real opportunity for Facebook’s future engagement growth is bringing the Stories format to the international market that Snapchat has largely neglected for four years and only recently got serious about by re-engineering its Android app. WhatsApp capitalized on Snap’s focus on U.S. teens by surging to become the top Stories product thanks to youth across the globe. And now Facebook is specifically building Stories features for countries like India, such as the new audio posts to help users with non-native language keyboards, and cloud storage so you can privately save photos and videos to Facebook for those without room on their phones.

Facebook Stories lets you shoot 360 photos without a 360 camera with this cool “paint with the lens” interface

Since testing in January 2017 and then launching in March 2017, Facebook has been rapidly iterating on its version of Stories in hopes of making it more unique and apt to its audience. That includes adding cross-posting from its other apps and a desktop interface, advanced shutter formats like Boomerang and new augmented reality features like 3D doodling and real-world QR and image triggers that anchor AR to a location.

Oh, and there’s one bonus unannounced feature we’ve spotted. Facebook Stories can now shoot 360 photos without a 360 camera. It uses a cool interface that shows you where to “paint” your camera over your surroundings, so unlike a panorama where you only get one shot, you can go back and fill in missed spots.

Snap’s beaten; time to monetize

All of Facebook’s efforts seem to be paying off. Snapchat sunk to its slowest daily user growth rate ever, a paltry 2.13 percent last quarter, while the much more saturated Facebook grew a strong 3.42 percent. Snapchat actually shrank in user count during March.

That might have been the signal Facebook needed to start putting ads in its Stories. It’s effectively beaten Snapchat into submission. Without as strong of a competitor, Facebook has more leeway to pollute the Stories user experience with ads. And that comes just as Snapchat is desperate to ramp up ad sales after missing revenue estimates in Q1 and mounting losses of $385 million.

Ads in stories have added a lot of value for businesses on Instagram, and we believe we can do the same on Facebook,” Facebook product manager Zoheb Hajiyani tells me. “Ensuring that this is a good experience for people using the product will be our top priority.” Facebook has lined up a number of ad test partners it’s not disclosing, but also will be running its own ads for Oculus inside Stories.

With existing Facebook and Instagram advertisers able to easily port their ads over to Facebook Stories, and much greater total reach, they might not go to the trouble of advertising on Snap unless they seek young teens. Stories could in fact be the answer to Facebook’s issue with running out of ad space in the News Feed while it shuts down its sidebar units. Stories could generate the ad inventory needed to keep pushing more marketing into the social network.

Stories were inevitable. First launched by Snapchat in October 2013, it took almost three years for Facebook to wake up to the format as an existential threat to the company. But with the quick success of Instagram’s clone, Facebook has wisely swallowed its pride and pivoted its apps toward this style of visual communication. It was another moment, like the shift to mobile, where Facebook could have faltered. But willingness to admit its mistakes and ruthlessly compete may have won another epoch of social dominance.

For more on Stories, check out our feature piece:

Source: Mobile – Techcruch

Facebook beats in Q1 and boosts daily user growth to 1.45B amidst backlash

Facebook beats in Q1 and boosts daily user growth to 1.45B amidst backlash

Amongst massive criticism over data privacy, Facebook showed the resiliency of its advertising machine by beating Wall Street’s $11.41 billion revenue estimate in its Q1 2018 earnings report by raking in $11.97 billion in revenue with $1.69 EPS compared to the $1.35 estimate.

Facebook added 48 million daily active users to hit 1.449 billion, up 3.42 percent to revive Facebook’s growth after slower 2.18 percent growth last quarter. But Facebook only added 70 million monthly active users to reach 2.196 billion, a 3.14 percent growth rate that was a little slower than last quarter’s 3.39 percent growth. Both daily and monthly users are up 13 percent year-over-year, showing Facebook’s troubles haven’t paralyzed its growth.

This was perhaps the most tumultuous quarter since Facebook went public. Facebook faced intense criticism regarding the Cambridge Analytica scandal and its data privacy practices, leading a massive pull-back of developer capabilities as Zuckerberg headed to testify before Congress. Last quarter saw Facebook’s first-ever decline in users in a market, with a 700,000 user drop in the U.S. & Canada market following changes to promote well-being that reduced the prevalence of viral videos.

Facebook was able to revive its U.S. & Canada user growth this quarter, perking back up to 185 million, from 184 million last quarter — though that’s just a return to where it was in Q3 2017. Monthly active user count in the market went from 239 to 241 million. That shows that while people might disagree with Facebook’s approach to privacy, they aren’t about to give up their News Feeds.

Demonstrating Facebook’s declining web presence, mobile made up $10.7 billion, or 91 percent of all ad revenue, up from 89 percent last quarter. Facebook reached $4.98 billion in profit, up from a weak $4.26 billion last quarter. Average Revenue Per User reached $5.53, up 30 percent year-over-year thanks to strong gains this quarter in Europe and Asia-Pacific. Facebook’s headcount has swelled 48 percent year-over-year as it’s now half-way to its promise of doubling its security and content moderation staff from 10,000 to 20,000 in 2018.

The recent scandals have put a lot of downward pressure on its share price, but apparently the company thinks it’s a good buy. It’s increased the amount authorized under a share repurchase program by an additional $9 billion, on top of an original $6 billion plan, of which it’s spent $4 billion. It’s partly to offset big stock distributions for employees, but CFO David Wehner also said it was “opportunistic,” aka related to Facebook perceiving its price as too low. Wall Street apparently liked the earnings report as shares are up over 4.38 percent to $166.68 in after-hours trading.

The question is whether the new ads transparency requirements, developer platform crackdown and Facebook’s quest to make using it healthier will show up in next quarter’s earnings. These changes could deter advertisers, give users less functionality to play with and remove low-quality viral content that might make users feel bad but keeps them scrolling.

CEO Mark Zuckerberg wrote that, “Despite facing important challenges, our community and business are off to a strong start in 2018. We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together.” We’ll get to hear more from him at 2pm Pacific during the earnings call, so stay tuned here.

Updates from the earnings call:

  • Zuckerberg said that Internet.org has now helped almost 100 million people connect to the internet, up from 40 million in November 2016.
  • Zuckerberg said 200 million people are now in “meaningful Groups,” up from 100 million last year, though Facebook has a long way to its 1 billion goal.
  • WhatsApp Status has pulled away as the most popular of Facebook’s Snapchat Stories clones. It was at 300 million daily users, equal to Instagram Stories, last time Facebook provided a stat.
  • Since users are moving from feed reading to Stories watching, Facebook says it needs to make Stories ads as good as feed ads to protect its core revenue stream.
  • Facebook CFO David Wehner warned that GDPR may cause Facebook’s European user count to be flat or shrink in Q2, and that it may have a minor impact on ad revenue.
  • Zuckerberg says one of his biggest regrets is that Facebook didn’t get to shape the mobile ecosystem because the company was still small when iOS and Android launched. That’s why Zuckerberg is adamant about Facebook having a major role in the future of virtual reality and augmented reality, which he sees as computing platforms of the future.

Source: Mobile – Techcruch

A flaw-by-flaw guide to Facebook’s new GDPR privacy changes

A flaw-by-flaw guide to Facebook’s new GDPR privacy changes

Facebook is about to start pushing European users to speed through giving consent for its new GDPR privacy law compliance changes. It will ask people to review how Facebook applies data from web to target them with ads, and surface the sensitive profile info they share. Facebook will also allow European and Canadian users to turn on facial recognition after six years of the feature being blocked there. But with a design that encourages rapidly hitting the “Agree” button, a lack of granular controls, a laughably cheatable parental consent request for teens, and an aesthetic overhaul of Download Your Information that doesn’t make it any easier to switch social networks, Facebook shows it’s still hungry for your data.

The new privacy change and terms of service consent flow will appear starting this week to European users, though they’ll be able to dismiss it for now, though the May 25th GDPR compliance deadline Facebook vowed to uphold in Europe is looming. Meanwhile, Facebook says it will roll out the changes and consent flow globally over the coming weeks and months with some slight regional differences. And finally, all teens worldwide that share sensitive info will have to go through the weak new parental consent flow.

Facebook brought a group of reporters to the new Building 23 at its Menlo Park headquarters to preview the changes today. But feedback was heavily critical as journalists grilled Facebook’s deputy chief privacy officer Rob Sherman. Questions centered around how Facebook makes accepting the updates much easier than reviewing or changing them, but Sherman stuck to talking points about how important it was to give users choice and information.

“Trust is really important and it’s clear that we have a lot of work to do to regain the trust of people on our service” he said, giving us deja vu about Mark Zuckerberg’s testimonies before congress. “We know that people won’t be comfortable using facebook if they don’t feel that their information is protected.”

Trouble At Each Step Of Facebook’s Privacy Consent Flow

There are a ton of small changes so we’ll lay out each with our criticisms.

Facebook’s consent flow starts well enough with the screen above offering a solid overview of why it’s making changes for GDPR and what you’ll be reviewing. But with just an ‘X’ up top to back out, it’s already training users to speed through by hitting that big blue button at the bottom.

Sensitive Info

First up is control of your sensitive profile information, specifically your sexual preference, religious views, and political views. As you’ll see at each step, you can hit the pretty blue “Accept And Continue” button regardless of whether you’ve scrolled through the information. If you hit the ugly grey “Manage Settings” button, you have to go through an interstitial where Facebook makes it’s argument trying to deter you from removing the info before letting you make and save your choice. It feels obviously designed to get users to breeze through it by offering no resistance to continue, but friction if you want to make changes.

Facebook doesn’t let advertisers target you based on this sensitive info, which is good. The only exception is that in the US, political views alongside political Pages and Events you interact with impact your overarching personality categories that can be targeted with ads. You can opt out of being targeted by those too. But your only option here is either to remove any info you’ve shared in these categories so friends can’t see it, or allow Facebook to use it to personalize the site. There’s no option to keep this stuff on your profile but not let Facebook use it.

Facial Recognition

Facebook is bringing facial recognition back to Europe and Canada. The Irish Data Protection commissioner who oversees the EU banned it there in 2012. Users in these countries will get a chance to turn it on, which is the default if they speed through. It’s a useful feature that can make sure people know about the photos of them floating around. But here the lack of granularity is concerning. Users might want to see warnings about possible impersonators using their face in their profile pics, but not be suggested as someone to tag in their friends’ photos. Unfortunately, it’s all or nothing. While Facebook is right to make it simple to turn on or off completely, granular controls that unfold for those that want them would be much more empowering.

[Update: This article has been update to reflect that Facebook indeed can offer facial recognition in Europe and Canada.]

Data Collection Across The Web

A major concern that’s arisen in the wake of Zuckerberg’s testimonies is how Facebook uses data collected about you from around the web to target users with ads and optimize its service. While Sherman echoed Zuckerberg in saying that users tell the company they prefer relevant ads, and that this data can help thwart hackers and scrapers, many users are unsettled by the offsite collection practices. Here, Facebook lets you block it from targeting you with ads based on data about your browsing behavior on sites that show its Like and share buttons, conversion Pixel, or Audience Network ads. The issue is that there’s no way to stop Facebook from using that data from personalizing your News Feed or optimizing other parts of its service.

New Terms Of Service

Facebook recently rewrote its Terms Of Service and Data Use Policy to be more explicit and easy to read. It didn’t make any significant changes other than noting the policy now applies to its subsidiaries like Instagram and Messenger. [Correction: But WhatsApp and Oculus have their own data policies.] That’s all clearly explained here, which is nice.

But the fact that the button to reject the new Terms Of Service isn’t even a button, it’s a tiny ‘see your options’ hyperlink shows how badly Facebook wants to avoid you closing your account. When Facebook’s product designer for the GDPR flow was asked if she thought this hyperlink was the best way to present the alternative to the big ‘I Accept’ button, she disingenuously said yes, eliciting scoffs from the room of reporters. It seems obvious that Facebook is trying to minimize the visibility of the path to account deletion rather than making it an obvious course of action if you don’t agree to its terms.

I requested Facebook actually show us what was on the other side of that tiny ‘see my options’ link and this is what we got. First, Facebook doesn’t mention its temporary deactivation option, just the scary permanent delete option. Facebook recommends downloading your data before deleting your account, which you should. But the fact that you’ll have to wait (often a few hours) before you can download your data could push users to delay deletion and perhaps never resume. And only if you keep scrolling do you get to another tiny “I’m ready to delete my account” hyperlink instead of a real button.

Parental Consent

GDPR also implements new regulation about how teens are treated, specifically users between the ages of 13 (the minimum age required to sign up for Facebook) and 15. If users in this age range have shared their religious views, political views, or sexual preference, Facebook requires them to either remove it or get parental consent to keep it. They also need permission to be targeted with ads based on data from Facebook’s partners. Without that permission, they’ll see a less personalized version of Facebook. But the system for attaining and verifying that parental consent is a joke.

Users merely select one of their Facebook friends or enter an email address, and that person is asked to give consent for their ‘child’ to share sensitive info. But Facebook blindly trusts that they’ve actually selected their parent or guardian, even though it has a feature for users to designate who their family is, and the kid could put anyone in the email field, including an alternate address they control. Sherman says Facebook is “not seeking to collect additional information” to verify parental consent, so it seems Facebook is happy to let teens easily bypass the checkup.

Privacy Shortcuts

To keep all users abreast of their privacy settings, Facebook has redesigned its Privacy Shortcuts in a colorful format that sticks out from the rest of the site. No complaints here.

Download Your Information

Facebook has completely redesigned its Download Your Information tool after keeping it basically the same for the past 8 years. You can now view your content and data in different categories without downloading it, which alongside the new privacy shortcuts is perhaps the only unequivocally positive and unproblematic change amidst today’s announcements.

And Facebook now lets you select certain categories of data, date ranges, JSON or HTML format, and image quality to download. That could make it quicker and easier if you just need a copy of a certain type of content but don’t need to export all your photos and videos for example. Thankfully, Facebook says you’ll now be able to download your media in a higher resolution than the old tool allowed.

But the big problem here was the subject of my feature piece this week about Facebook’s lack of data portability. The Download Your Information tool is supposed to let you take your data and go to a different social network. But it only exports your social graph aka your friends as a text list of names. There are no links, usernames, or other unique identifiers unless friends opt into let you export their email or phone number (only 4% of my friends do), so good luck finding the right John Smith on another app. The new version of Download Your Information exports the same old list of names, rather than offering any interoperable format that would let you find your friends elsewhere.

A Higher Standard

Overall, it seems like Facebook is complying with the letter of GDPR law, but with questionable spirit. Sure, privacy is boring to a lot of people. Too little info and they feel confused and scared. Too many choices and screens and they feel overwhelmed and annoyed. Facebook struck the right balance in some places here. But the subtly pushy designs seem intended to steer people away from changing their defaults in ways that could hamper Facebook’s mission and business.

Making the choices equal in visible weight, rather than burying the ways to make changes in grayed-out buttons and tiny links, would have been more fair. And it would have shown that Facebook has faith in the value it provides, such that users would stick around and leave features enabled if they truly wanted to.

When questioned about this, Sherman pointed the finger at other tech companies, saying he thought Facebook was more upfront with users. Asked to clarify if he thought Facebook’s approach was “better”, he said “I think that’s right”. But Facebook isn’t being judged by the industry standard because it’s not a standard company. It’s built its purpose and its business on top of our private data, and touted itself as a boon to the world. But when asked to clear a higher bar for privacy, Facebook delved into design tricks to keep from losing our data.

Source: Mobile – Techcruch

The psychological impact of an $11 Facebook subscription

The psychological impact of an Facebook subscription

Would being asked to pay Facebook to remove ads make you appreciate their value or resent them even more? As Facebook considers offering an ad-free subscription option, there are deeper questions than how much money it could earn. Facebook has the opportunity to let us decide how we compensate it for social networking. But choice doesn’t always make people happy.

In February I explored the idea of how Facebook could disarm data privacy backlash and boost well-being by letting us pay a monthly subscription fee instead of selling our attention to advertisers. The big takeaways were:

  • Mark Zuckerberg insists that Facebook will remain free to everyone, including those who can’t afford a monthly fee, so subscriptions would be an opt-in alternative to ads rather than a replacement that forces everyone to pay
  • Partially decoupling the business model from maximizing your total time spent on Facebook could let it actually prioritize time well spent because it wouldn’t have to sacrifice ad revenue
  • The monthly subscription price would need to offset Facebook’s ad earnings. In the US & Canada Facebook earned $19.9 billion in 2017 from 239 million users. That means the average user there would have to pay $7 per month

However, my analysis neglected some of the psychological fallout of telling people they only get to ditch ads if they can afford it, the loss of ubiquitous reach for advertisers, and the reality of which users would cough up the cash. Though on the other hand, I also neglected the epiphany a price tag could produce for users angry about targeted advertising.

What’s Best For Everyone

This conversation is relevant because Zuckerberg was asked twice by congress about Facebook potentially offering subscriptions. Zuckerberg endorsed the merits of ad-supported apps, but never ruled out letting users buy a premium version. “We don’t offer an option today for people to pay to not show ads” Zuckerberg said, later elaborating that “Overall, I think that the ads experience is going to be the best one. I think in general, people like not having to pay for a service. A lot of people can’t afford to pay for a service around the world, and this aligns with our mission the best.”

But that word ‘today’ gave a glimmer of hope that we might be able to pay in the future.

Facebook CEO and founder Mark Zuckerberg testifies during a US House Committee on Energy and Commerce hearing about Facebook on Capitol Hill in Washington, DC, April 11, 2018. (Photo: SAUL LOEB/AFP/Getty Images)

What would we be paying for beyond removing ads, though?. Facebook already lets users concerned about their privacy opt out of some ad targeting, just not seeing ads as a whole. Zuckerberg’s stumping for free Internet services make it seem unlikely that Facebook would build valuable features and reserve them for subscribers

Spotify only lets paid users play any song they want on-demand, while ad-supported users are stuck on shuffle. LinkedIn only lets paid users message anyone they want and appear as a ‘featured applicant’ to hirers, while ad-supported users can only message their connections. Netflix only lets paid users…use it at all.

But Facebook views social networking as a human right, and would likely want to give all users any extra features it developed like News Feed filters to weed out politics or baby pics. Facebook also probably wouldn’t sell features that break privacy like how LinkedIn subscribers can see who visited their profiles. In fact, I wouldn’t bet on Facebook offering any significant premium-only features beyond removing ads. That could make it a tough sell.

Meanwhile, advertisers trying to reach every member of a demographic might not want a way for people to pay to opt-out of ads. If they’re trying to promote a new movie, a restaurant chain, or an election campaign, they’d want as strong of penetration amongst their target audience as they can get. A subscription model punches holes in the ubiquity of Facebook ads that drive businesses to the app.

Resentment Vs Appreciation

But the biggest issue is that Facebook is just really good at monetizing with ads. For never charging users, it earns a ton of money. $40 billion in 2017. Convincing people to pay more with their wallets than their eyeballs may be difficult. And the ones who want to pay are probably worth much more than the average.

Let’s look at the US & Canada market where Facebook earns the most per user because they’re wealthier and have more disposable income than people in other parts of the world, and therefore command higher ad rates. On average US and Canada users earn Facebook $7 per month from ads. But those willing and able to pay are probably richer than the average user, so luxury businesses pay more to advertise to them, and probably spend more time browsing Facebook than the average user, so they see more of those ads.

Brace for sticker shock, because for Facebook to offset the ad revenue of these rich hardcore users, it might have to charge more like $11 to $14 per month.

With no bonus features, that price for something they can get for free could seem way too high. Many who could afford it still wouldn’t justify it, regardless of how much time they spend on Facebook compared to other media subscriptions they shell out for. Those who truly can’t afford it might suddenly feel more resentment towards the Facebook ads they’ve been scrolling past unperturbed for years. Each one would be a reminder that they don’t have the cash to escape Facebook’s data mines.

But perhaps it’s just as likely that people would feel the exact opposite — that having to see those ads really isn’t so bad when faced with the alternative of a steep subscription price.

People often don’t see worth in what they get for free. Being confronted with a price tag could make them more cognizant of the value exchange they’re voluntarily entering. Social networking costs money to operate, and they have to pay somehow. Seeing ads keeps Facebook’s lights on, its labs full of future products, and its investors happy.

That’s why it might not matter if Facebook can only get 4 percent, or 1 percent, or 0.1 percent of users to pay. It could be worth it for Facebook to build out a subscription option to empower users with a sense of choice and provide perspective on the value they already receive for free.

For more big news about Facebook, check out our recent coverage:

Source: Mobile – Techcruch