Artificial intelligence, virtual reality, live video streaming. These are the big things investors see helping Facebook Inc (NASDAQ:FB) and FB stock grow in the years ahead, but it’s a little thing the company’s currently experimenting with that could be the real driver of FB stock. Here’s why.
We’ve all heard about Alphabet Inc’s (NASDAQ:GOOGL, NASDAQ:GOOG) moonshots, those great ideas that cost the company millions with little or no immediate return but offer a tremendous amount of hope.
They’re called moonshots because the odds of commercial success are incredibly high; profitability? Even higher.
Meanwhile, at Facebook, Mark Zuckerberg and company are conducting an experiment in several smaller countries across the globe that could change the way we view and use its social media app.
It’s an experiment that’s so seemingly insignificant that you wonder why it bothers. Well, it does so because all successful businesses know the devil is in the details. Do a lot of little things right and they turn into big things. Forget to dot the i’s and cross the t’s and your business falls apart.
What’s the Experiment?
Facebook is testing splitting its News Feed into two; one with updates from friends and contacts and a second called Explore which will serve up items it feels a user would be interested in.
“We are testing having one dedicated space for people to keep up with their friends and family, and another separate space, called Explore, with posts from pages,” said Adam Mosseri, Facebook’s head of Newsfeed in an October 23 blog post. “The goal of this test is to understand if people prefer to have separate places for personal and public content.”
Just a few days after revealing it is indeed testing the dual-feed concept in Sri Lanka, Bolivia, Slovakia, Serbia, Guatemala and Cambodia, people are already freaking out as if Facebook’s taking a right to vote away or something fundamental.
Over at Quartz, they’re thoroughly unimpressed with the dual-feed concept.
“A few of us at Quartz went to our personal Explore sections to find out what content Facebook thought we were interested in,” wrote Nikhil Sonnad October 24. “What the world’s largest social network delivered was the absolute dredges of the internet, from fake news about the Las Vegas massacre to HOMELESS PEOPLE REACT TO MAGIC TRICKS! ( LA).”
Well, your first mistake is going to Facebook to fill your appetite for news. The same holds true for Twitter Inc (NYSE:TWTR) and any other social media apps you might use.
Facebook isn’t a Non-Profit
Facebook is a business, first and foremost, and if it can kill two stones with one bird by separating content by user importance while increasing its advertising revenue, theoretically everybody wins — especially owners of FB stock.
For this experiment to be successful, it’s got to ensure that Explore isn’t delivering the “dredges of the internet” but quality news and information. It’s for this reason that it’s testing in these six countries where it will affect the least amount of people.
Also, Mosseri made it entirely clear that it’s only a test, they don’t have any plans to roll it out beyond those six countries and it’s not charging for commercial pages to be distributed in both places.
For now, Facebook is playing nice in the sandbox, but if there are any indication users like the dual-feed better than the existing single feed, you can bet they’ll break every one of Mosseri’s points mentioned previously.
Money talks and you-know-what walks.
Why This Experiment Could Be Huge
A few years ago I had this idea to create a website dedicated to investors interested in the sports and leisure industries. My thought was to have a dual-feed where one feed had commentary by industry experts about sports and leisure from a non-commercial point of view and then a second screen dedicated to news and analysis about sports and leisure investments, public and private.
Let’s take Lululemon Athletica Inc. (NASDAQ:LULU) as an example. Everyone over the age of 25 that shops there aren’t just lovers of yoga or athletics, they’re also potential investors in LULU stock. Conversely, LULU investors are also potential Lululemon customers or guests as the company likes to call them.
I still think it’s an excellent idea and a great way to engage visitors to the website.
So, when I heard about this test on Facebook, I just had to write about the commercial potential of splitting the News Feed into two focused streams.
Yes, the commercial aspects might be off-putting to some but if done right, it can improve the Facebook user experience and since users pay nothing, I can’t help but think that this is a no-brainer of an experiment that could lead to a win/win solution for all stakeholders — even advertisers.
Facebook Experiment and FB Stock
Whatever happens from this exercise, Facebook and investors of FB stock can rest easy knowing that the company isn’t sitting on its laurels and is prepared to focus on little details to keep ahead of the pack.
Sometimes, little details turn into big ones.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.
