Facebook Bets Big on ‘Stories.’ What If They’re a Fad?

(Bloomberg Opinion) -- In this cloudy year for Facebook Inc., it’s crystal clear that the company is smashing the gas pedal all the way down for “stories,” the short photo-and-video diaries that Snapchat pioneered and Facebook’s Instagram copied a couple of years ago. 

Stories are everywhere now at Facebook. Instagram and Facebook put people’s stories at the very top of the apps so people can’t help but click on them. On Wednesday, the company opened its doors wide for advertising in the Facebook app’s version of the story format. Messenger and WhatsApp have stories, too. The company is trying hard to persuade businesses to tailor their marketing pitches for stories and spread them across Facebook and Instagram.

But what if Facebook is wrong to make stories a top priority? What if people tire of the format? Or what if they work for Instagram but not the other Facebook properties? Mark Zuckerberg is making a big wager on stories, and if he’s wrong, it won’t be good. Story-formatted ads generate less revenue for Facebook than its more established news feed marketing slots, and executives in part blamed the gap for a predicted slowdown in revenue growth

Facebook Bets Big on ‘Stories.’ What If They’re a Fad?

Facebook has successfully predicted trends before — most famously when Zuckerberg upended the company’s strategy in his bet that smartphones would be the dominant form of internet activity. He was absolutely correct. He could be right about stories, too, which I find fresh and more authentic than regular social media posts. 

But Facebook has bet wrong before, too. A few years ago, Zuckerberg proclaimed that Facebook’s future was video, and the company pushed live video zealously. Facebook wasn’t the only company betting on live video, either. It was hardly a flop, but live videos haven’t taken over the world, and Facebook stopped avidly urging people to record and broadcast their lives in real time online.

Facebook Bets Big on ‘Stories.’ What If They’re a Fad?

I hear echoes of Facebook’s live video playbook now when the company talks about stories. That should give Facebook watchers a little nervous twinge. 

On Wednesday, I attended a press conference during which Facebook executives touted rapid adoption of stories by people using Facebook, Instagram and its other apps and the compelling early results that companies were seeing from ads in story form. It was a strong pitch. Facebook said 300 million users see or make a story on Facebook or Messenger every day.

The company showed the chart below to offer a glimpse at the number of story-formatted posts on all of its apps, compared with the number of conventional social network posts like those in the news feed. (You perhaps will notice that the Y-axis is not labeled, a misleading trick that I like to call the “Amazon chart” for its frequent use by the e-commerce giant. I confirmed, at least, that the Facebook chart is to scale.)

Facebook Bets Big on ‘Stories.’ What If They’re a Fad?

A few caveats to those stats. In Facebook’s world, 300 million people aren’t that many. An average of 1.5 billion people use Facebook or Messenger each day, and given how avidly Facebook is trying to steer people to stories, I find it underwhelming that 20 percent of those daily users see or make a story. Facebook said in July that 400 million people had some interaction with Instagram stories, a more impressive 40 percent or so of Instagram’s daily users.

I will say that the chart showing an apparently large share of stories as a percentage of total pieces of information posted (as opposed to simply viewed) on Facebook’s apps is more compelling. 

But popularity can — like the stories themselves — be ephemeral. There have been reports that Snap Inc. has experienced slowing growth or worse for its story format. It’s true that Snapchat is more likely to be used for one-to-one messages with friends rather than the daily diaries of someone’s day on the beach or experience at a sporting event. But Snap’s reported hiccups show the story format isn’t an unquestioned hit everywhere.

And Facebook had similar positive messages about live video a couple of years ago. It stressed the format with advertisers and told them people were far more likely to watch a commercial message live than pre-recorded. It trumpeted booming use of live video by Facebook users. In early 2017, Facebook said one in five videos on Facebook was live. You’ll notice that’s about the same share of Facebook or Messenger users now watching or making stories. 

Just because the playbooks are similar doesn’t mean that stories will fall off Facebook’s priorities list the way live video has. But it is a useful warning.

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

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

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