Over the years, I’ve written about the ecosystem play and how Facebook was one of a handful of names that was positioned to profit from its very strong ecosystem. That is quickly happening and while the stock has already gained tremendously, I believe a lot more upside is left.
The “New” Web
In a world where most internet users are going online through mobile devices, the starting point is no longer a Google homepage or even an internet browser. Rather, users start with their home screen where they access their apps. For more and more users, that means Facebook. In the US, the 2 most downloaded apps are Facebook and Facebook Messenger. Not far behind are Instagram and Whatsapp. In fact, AppAnnie has 4 of the top 6 apps of all time belonging to Facebook:
Nearly all the time spent on mobile devices is spent in apps (rather than on the mobile web) and time spent in apps is even catching up to tv time:
The Growth Of The “Closed Garden”
Remember the mission of Google to organize the world’s information? That is becoming increasingly difficult in a world where more and more of the information is within Facebook’s closed ecosystem. The first step was consumers talking to each other within the walls of Facebook, Messenger, Instagram. There is little doubt that Facebook has achieved that goal as users (by the tune of 1B in a single day) use the network to catch up with friends and family, share photos, videos and chat.
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From Consumers to Businesses
That is quickly growing though as businesses (from the biggest to the smallest) are increasingly using their Facebook pages to keep in touch with consumers and soon will be able to offer coupons and products for sale. Every time I see an ad by companies that send their users towards their Facebook/Instagram pages, I’m reminded of how much power and influence Facebook has been able to gain. On the core Facebook product, the company has been able to grow advertising spend by those businesses both by giving incredible ROI and by “selling” timeline views for users that have “linked” those business pages. I also think the “M” initiative for Facebook messenger is incredibly promising. If Facebook is able to help businesses communicate more efficiently with clients, that will certainly end up helping the top and bottom lines.
Facebook has also started enabling content creators to distribute content within its walls through videos and instant articles for newspapers/blogs/magazines. This sets Facebook up for massive success if it continues to focus on building its products, its audience and then moving to monetization. Facebook has obviously done very well in monetizing its core Facebook product through advertising but has yet to focus on that aspect for Messenger, WhatsApp and Instragram. I strongly believe that Facebook will continue to slowly “open the pipes” and see strong growth in its other properties. This will happen through advertising but also through payments, ecommerce, etc. These revenue charts will continue to display strong growth in the coming years:
Disclaimer: Long Facebook (FB)