Facebook execs warn that revenue growth will slow, while spending rises, as the company tries to increase the amount of time users spend on the site.
The social media company owes some of its torrid revenue growth to its efforts to expand its ad load. But that will only grow “modestly” until mid-2017, slowing the pace, the company told analysts in a conference call to discuss Q2 earnings.
At the same time, capital expenditures will increase “pretty substantially” to help Facebook’s network accommodate the increase in professional and consumer videos it hopes to see.
“It’s early but we’re really excited about it,” COO Sheryl Sandberg says. Users will “share what they care about with anyone they want.” It’s already helping to increase the amount of time users spend on Facebook.
In May the company offered advertisers additional opportunities to insert video sales pitches.
Facebook is “experimenting across a wide variety of things” for additional content, she says. For example it will stream some Men’s Olympic team basketball games, although “our primary focus is on short-form content, not long-form content.”
It’s part of what CEO Mark Zuckerberg describes as a “video first” strategy that will increasingly include virtual and augmented reality. “We believe virtual reality will help people with richer experiences that help everyone understand what’s going on around the world.”
He rejects the theory that Facebook insulates users from different points of view because their feeds are dominated by like minded friends. Facebook and social media generally “are the most diverse forms of media out there,” Zuckerberg says. “Even if a lot of your friends come from the same background, if you know a few hundred people, 5% or 10% or 15% will have different viewpoints that will show up in your news feed.”
That’s better than learning about the world from a newspaper or cable channel that reinforces one’s pre-existing views, he adds.
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