Facebook has decided that it is time to focus on improving user experience by reducing the abundance of ads that appear on its newsfeed. Just the mention of such a move to the company’s key source of income has led to a 7% decrease in share value for the company
Yet, Facebook believes that have reached the saturation point where additional ads would lead to alienated users. CFO of Facebook, Dave Wehner states, “Over the past two years we have averaged about 50% revenue growth in advertising. Ad load has been one of the three primary factors fueling that growth.”
Wehner also states, “Eventually you would expect demand to start outweighing supply, meaning advertisers will have to start paying more for ad clicks.” Wehner pointed out that they need to revise their marketing strategy in order to maximize their return on investment. “This will include a greater emphasis on ad targeting and personalization using tools such as Facebook custom audiences to retarget people who’ve visited their websites or interacted on another channel, for example – as well integrating Facebook even more into their broader marketing strategy.”
This strategy will also force companies that utilize Facebook for advertising, to develop their ads more wisely, focusing on testing different versions of ads to make sure they are getting the biggest bang for their buck when it comes to their ad placement.
