Facebook Inc’s (NASDAQ:FB) attempt to improve user experience and engagement is evident from the initiatives that the company has been undertaking.
The company recently launched a tool that will enable users to review businesses after they make a purchase. Moreover, the ones that receive the most negative feedbacks will get a chance to improve on their services.
However, failing to “improve customer satisfaction and better meet customer expectations” could lead to the ads being banned from the platform.
The news comes on the heels of Facebook announcing advertisements on Marketplace, which the company launched in 2016 for users to buy, sell, and discover items in their local community.
This shows that the company is upholding its commitment to provide users a better ad model “by strengthening privacy and choice, while giving businesses of all sizes new and better tools to help them grow.”
Facebook banks on advertisements for generating the majority of its revenues. The huge user base of over 2.2 billion is what makes the platform so attractive to advertisers.
Facebook is trying to gain user confidence by making sure that the ads run on the platform are authentic. We believe that by providing users the ability to choose what they see on the platform will help it increase credibility. Notably, the company is building industry-leading transparency tools to achieve the end.
Moreover, the company’s focus on showing more useful advertisements is not only improving user engagement but also helping businesses to grow.
Facebook has over 6 million active advertisers and 80 million active SMBs on the platform. We believe that by aggregating customer feedback, Facebook will help advertisers gauge their performance and thereby make better decisions.
However, Facebook needs to tread cautiously so as not to irritate users with too many ads. With the user base already at sky-high levels, a relative slowdown is imminent. Also, it is approaching full penetration in North American and European markets. Nevertheless, growth in Asia and the rest of the world should help it counter domestic saturation in the foreseeable future.
Zacks Rank & Stocks to Consider
Facebook currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include NVIDIA Corporation (NASDAQ:NVDA), Micron Technology, Inc. (NASDAQ:MU) and Twitter Inc (NYSE:TWTR), all sporting a Zacks Rank #1 (Strong Buy).
Long-term earnings growth rate for NVIDIA, Micron and Twitter is projected to be 10.3%, 10% and 23.1%, respectively.
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