The Facebook And Twitter Q2 Earnings Story: Quality Over Quantity – Info AI

What you’ll hear from the press this week:

  • Facebook missed its for the first time since 2015. But in our world, 43% YOY increase in revenue and 11% YOY increase in DAUs and MAUs is still a solid performance. Facebook continues to diversify by augmenting its core Facebook social network with ancillary products (Instagram, WhatsApp, Messenger), new ad formats and inventory, and experiments with different features. A slight hit in one area like Facebook core users can be offset by other areas, such as Instagram growth.
  • No news is good news for given its historically uneven performance. Twitter’s results weren’t notable: It maintained user numbers and exhibited respectable revenue growth. It continues to stress its relevancy during major global events like the World Cup or Wimbledon as the proof point for users and advertisers.

 

The real story is that the social networks are finally coming around on “quality over quantity.” Facebook and Twitter recognize that online abuse continues to erode the social user experience and they are taking action:

  • Facebook is trying to improve its newsfeed. It launched efforts such as deemphasizing publishers’ news content, surfacing more friends-and-family content, hiring more editors to stop misinformation and its dispersion, and making its ads more transparent. “Looking ahead, we will continue to invest heavily in security and privacy because we have a responsibility to keep people safe,” stated Mark Zuckerberg, Facebook CEO, on the Q2 earnings call. He added, “But in addition to this we also have a responsibility to keep building services that bring people closer together in new ways as well.” But Facebook has a tough road ahead as it seeks to draw a line between protecting free speech and suppressing hate speech.
  • Twitter is trying to clean up its cesspool of bots and trolls. It recently embarked on purging tens of millions of spam accounts and suspended 143,000 developer apps. “We are making active decisions to prioritize health initiatives over near-term product improvements that may drive more usage of Twitter as a daily utility,” states its Q2 shareholder letter.

 

What it means:

Moving forward, we expect to see deceleration in user and revenue growth for both social networks as attention turns to quality over quantity. This should surprise no one because for the past year, Facebook in particular has been stating ad nauseam that it anticipates a slowdown. The GDPR tightened user privacy and data controls, impacting ad targeting and the ability to share social network data with third-party apps.

Forget “networks.” The new buzz word is “communities.” Prepare for the resurrection of private social communities.

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Article Prepared by Ollala Corp

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