Facebook (FB) users could be spending more time reading their News Feed in the near future. Well, some form of their News Feed, at least. In its mobile app, Facebook is testing multiple, topic-based content feeds from friends and Pages you follow. This development follows a similar test for desktop FB users.
The new design could lead to higher engagement rates, which could translate into more revenue opportunities for Facebook stock investors.
At the same time, the test format competes directly with Twitter (TWTR) for people who use its app to curate a timeline around specific topics.
Growing Engagement for Facebook Stock Investors
The reason behind the experiment is to provide “new options to see and have conversations about more stories on Facebook around specific topics they’re interested in,” according to a spokesperson who spoke with The Verge. In other words, it provides more ways for users to engage with content on Facebook.
That’s something FB users have expressed an interest in, as the spokesperson noted, which is good news for FB stock investors. 63% of Facebook users said that they get news from Facebook, the same percentage as the more news-oriented Twitter, confirming what the spokesperson said. Facebook is catering to that growing sect of users, in particular, making it easier for them to find news items as well as content based around general topics such as style and travel.
Organizing general content around more specific content also presents a huge advertising opportunity for Facebook stock investors. While FB knows, for the most part, what users are interested in, a topic-based News Feed provides insight into what users are interested in right now. It’s this kind of real-time expressed interest that made Google billions of dollars through search advertising.
That’s also the opportunity for Twitter’s Moments, which similarly curates content around even more specific topics. While Twitter hasn’t made much progress using interstitial ads in the middle of Moments — like Snapchat does with its Stories and Discover sections — the potential is there, as long as it attracts users as expected. Facebook’s new test of topic-based News Feeds could prevent Twitter from maximizing Moments, with FB stock investors seeing the difference made up in Facebook revenue.
The Great Potential for Facebook Stock
The Facebook app is the most popular app in the United States, if not the world, by a wide margin. The company’s dominance on mobile provides a platform for Facebook to influence how people use the Internet on mobile devices, and that’s one of the biggest opportunities for Facebook stock.
The topic-based News Feed experiment is just one example of Facebook’s efforts to control how people use the Internet. FB wants to become a destination for news, and the test format makes it easier to find and consume. Additionally, Facebook is working with publishers to expand Instant Articles, so it can display news items without users ever having to leave its walled garden.
Likewise, Facebook is testing multiple new shopping features that will enable users to find and buy items without leaving FB. Along with the News Feed test, Facebook also confirmed that it’s expanded its new “Marketplace” feature, which allows users to find items listed for sale locally in Facebook Groups and nationally from Facebook Pages. In the new test, the Marketplace icon sits in the middle of the footer bar on the mobile app, replacing the Messenger icon.
As Facebook expands its functionality, the potential time users will spend on its apps increases. More time spent means more advertising and revenue opportunities for Facebook stock investors. While FB’s engagement rate is already very high, new experiments such as the topic-based News Feed and Marketplace expansion, are just a couple feature that show there’s still room for engagement to improve.
Adam Levy holds no position in any of the companies mentioned in this article at the time of writing.
