A students wears a virtual reality (VR) headset at the Facebook Inc. Hack Station in Sao Paulo, Brazil (Photographer: Patricia Monteiro/Bloomberg)  

Facebook's Fidji Simo Wants to Make Sure You're Really Watching

(Bloomberg Gadfly) -- Mark Zuckerberg has said digital video is the future of Facebook. It's Fidji Simo's job to make sure he's right. 

Simo, vice president of product for Facebook, oversees the company's effort to transform itself into a hub for web video of all kinds, including a new television-like destination that is Facebook's latest high-priority project. Facebook's bet on video has dual goals: Keep its 2 billion users hooked and grab more of the advertising money that contributes 98 percent of the company's revenue.

Video is essential to Facebook, but its strategy is very much a work in progress. That puts Simo in one of the toughest and highest-stakes jobs in the technology industry.

Two things are clear: One, Facebook's ping-pongs from one digital video project to another make it clear Simo and her company still haven't figured out the right approach. And two, while Facebook has often had a rocky relationship with media companies, entertainment firms and advertisers, these partners -- which Facebook needs to stock the social network with posts and video -- seem more agitated than ever at the company. 

Facebook's Fidji Simo Wants to Make Sure You're Really Watching

Looking at a Facebook feed today that's packed with digital videos, it's hard to remember that it wasn't always this way. Facebook for years featured mostly text postings from friends and family members. When mobile devices became the dominant way people used Facebook, photos shot on smartphones took over.

Only in the last few years has Facebook put its foot on the gas to emphasize digital video posts -- partly in response to people's behavior, and partly driving it. Three years ago, Facebook for the first time said more than half of Americans who use Facebook daily watched at least one video a day. The bet is if people hang out longer to watch videos of their cousin's birthday party or a web video series, Facebook can increase its hold on people's time and turn their attention into advertising revenue. 

Facebook's video strategy has continued to morph under Simo's watch. Facebook initially emphasized video as a way to encourage politicians, celebrities and media companies to post more on Facebook. In 2016, live internet video was the company's obsession. It paid companies and celebrities including Gordon Ramsay and CNN to broadcast videos in real time on Facebook. 

Now, live video has taken a back seat to a four-month-old video section called Watch, a hub for longer, TV-like entertainment that's intended to get people watching and talking together. Watch hasn't perfected the formula yet, and Facebook is refining both the programming strategy and the types of advertisements in Watch. "We're talking about changing people's behavior over time," Simo said in a December interview with Gadfly. 

Facebook's Fidji Simo Wants to Make Sure You're Really Watching

She acknowledged the company needed to do more, and Facebook has said it’s doubling down on Watch programs that are drawing fans, like the reality show that follows notorious basketball father LaVar Ball and his three sons. Simo also said Facebook was making it easier for people to find video they want and over time plans to customize the programming suggestions to individual tastes. As she talked about Watch, Simo repeatedly used the word "community," which echoes Zuckerberg's goal of making Facebook a virtual public gathering place that can unite people.

Facebook is also rethinking the advertising for Watch and for digital video elsewhere. In a first for Facebook, the company has been experimenting with ads inserted into the middle of videos, similar to TV commercials. It’s clear the video ads aren't working well yet, and Facebook has been tinkering with the approach.

In a surprising development, Facebook also plans to try YouTube-style ads that roll before Watch videos. Zuckerberg has always expressed distaste for these "pre-roll" advertisements, but the company thinks different tactics are needed for Watch. “There’s no doubt that our monetization strategy is still evolving,” Simo said in the interview.

Facebook's Fidji Simo Wants to Make Sure You're Really Watching

It's a familiar pattern for Facebook: The company makes the rules of engagement on the social network and changes them whenever it needs. It makes sense to respond quickly to changing internet behavior, but Facebook’s shifting missions also frustrate advertisers, media companies and others that rely on attracting customers on Facebook and have to respond to every company whim. 

"They create a maze and we figure out how to run through it," said Amy Emmerich, chief content officer of digital media company Refinery29, which helps produce the "Strangers" video series for Watch. Emmerich said she doesn't mind being a lab rat because her company and Facebook "are in the lab together" trying to learn what works in digital video. 

Facebook is betting Simo can figure it out, and she has a successful track record. After Simo arrived at Facebook seven years ago from eBay Inc., she was instrumental in expanding Facebook ads tailored to smartphones. Smartphone ads were the most important financial development in Facebook's history, and mobile advertising now generates the vast majority of the company's revenue. Simo also shepherded many other significant (and controversial) Facebook features, including videos that start playing automatically and quick-loading articles that don't require people to click away to news websites.  

Simo's efforts to refine Facebook's video strategy are also a glimpse at the richest prizefight in media and technology. Almost every technology company, including Facebook, Google and Snapchat, wants to displace television as the world's primary form of entertainment.

The winds of change are blowing in their favor. Young people are watching less TV than their elders and tuning into digital hangouts instead. In response, the money spent on internet advertising is set to pass TV advertising spending for the first time this year. To capitalize on the trend, Facebook is courting companies to create more entertainment and advertising customized to Facebook's smartphone-toting audience. Facebook is also bridging the gap by mimicking elements of traditional TV. Watch is one example of that. 

Facebook’s last big turning point was transforming itself into a smartphone-centric social network. That metamorphosis made Facebook one of the biggest corporate success stories in the last decade. Facebook's video strategy has similarly high stakes, but the jury is out on whether that bet will make Facebook's future, or break it. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

  1. "Watching" a video doesn't necessarily mean what you think. Some internet companies, including Facebook, count a video as viewed even if people watch only a few seconds of it. 

To contact the author of this story: Shira Ovide in New York at sovide@bloomberg.net.

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