Former divisional head at Facebook Inc
- Impact of the coronavirus on Facebook (NASDAQ: FB), focusing on its namesake Facebook property
- Near-term and longer-term coronavirus implications, highlighting opportunities and risks
- Facebook's offerings and innovation in and around e-commerce
- Outlook for 2020-21
What are your thoughts on Facebook and its primary properties and businesses, especially given the global coronavirus situation particularly in the US?
I think Facebook as a company and the property itself experienced some notable user engagement growth in Q1, reporting 10-12% growth in MAU [monthly active users], DAU [daily active users], MAP [family monthly active people] and DAP [family daily active people], with most of its major countries having shelter-in-place guidelines in effect. The company also said it would lose some of this greater engagement when the coronavirus-related restrictions are relaxed somewhat. How should we think about user engagement growth trajectories? What do you expect the impact to be once more normalcy ensues?
I think Facebook, like other similarly situated companies and properties, communicated similar trajectories of demand and ad-related revenue, from January and February into March, when a lot of lockdowns, particularly in the US, went into effect. It seems like some of the key metrics started to bottom in March and April and there were some signs of stabilisation. Do you have any thoughts on what we should be expecting, in key metrics, pertaining to Facebook? How would you expect those fundamentals to trend, from now until the balance of the year?
You alluded to the need to support SMBs. I think Facebook announced a grants programme that had USD 100m allocated to it, but as you pointed out, even when the economy stabilises and improves, it will take notably longer for the ad revenue trajectory to improve. Given the continuing struggles that SMBs might have, do you think as a result, Facebook also might seek to essentially provide more advertising from an inventory perspective? Could it do more ad load and ad fill, so that it can offset any weakness in pricing?
It seems like there is a consensus that Facebook, as well as Google, are positioned to perform better than a lot of the other properties, because there will be a critical mass of users and engagement, so they will get the ROI that they are seeking. It’s interesting to hear you say that in certain respects, it’s going to take a while for there to be this recovery, although perhaps Facebook, especially Facebook Blue, has more relative exposure to SMBs than some of the other prominent properties out there as well. It seems like what you are suggesting, however, is that with lower CPMs overall and a relatively slow recovery, given SMB challenges, that it is not that Facebook will seek to sell more advertising in the News Feed, but will seek other monetisation opportunities, both in under-monetised properties or elements, as well as other areas. Is that correct? It sounds like you are indicating that the company is sensitive about the notion of ad load.
How do you think the company is positioning itself from a spending perspective? Might it be more aggressive with product and talent investments than some might expect, given the size of the company, its balance sheet strength, and opportunities to move into areas such as e-commerce?
Do you think it is fair to suggest that Facebook’s margins will be under some pressure, because as you referenced, it will be a slow recovery in a big part of that ad revenue. In addition, that revenue tends to be high margin. When you couple that with the fact that the company is talking about a relatively low reduction in expected 2020 expenses with a prioritisation shift on under-monetised properties and new ways to generate revenue, does that suggest that margins could be challenging for the next couple of years?
Do you think Facebook will gain market share from a user and advertising dollar perspective over the balance of 2020?
What are your thoughts on the Facebook Shops announcement from a couple of days ago? What were your primary takeaways from that, and how much opportunity do you think Facebook really has here? How confident are you that Facebook can execute on its vision and strategy?
You said Facebook is seizing upon a moment where, on one hand, advertising revenues will be challenged for some time, and it views e-commerce as a dominant theme currently with shutdowns having such an impact on traditional retail. Is it your sense that Facebook was planning on doing something along the lines of Shops, that might have been planned ahead of the holiday season or some time next year, and Facebook pulled this in to do this now?
Over the last year, I think Shopify announced ad buying options with Facebook as well as Snapchat. Instagram launched Shopping Ads and Pinterest introduced its Shop tabs. What are your thoughts on these and related efforts? Can social really drive e-commerce? It seems that Instagram Shopping Ads have got the most attention. To what extent do you think this is a viable business approach for these companies?
You mentioned the notion of people seeing ads that advertisers are hoping will drive a purchase. That would seem, to me, to indicate that there would be a fair amount of interplay between the traditional Facebook Ads business and Facebook Shops. How do you expect the two to interact?
When you saw the Facebook Shops announcement and read through it, what jumped out at you? What are some points of differentiation that you expect Facebook to push and emphasise as it rolls this out?
When Facebook announced Facebook Shops, the exact wording of the headline was, “Introducing Facebook Shops: Helping Small Businesses Sell Online.” As you indicated before, small businesses are hurting right now. Facebook is trying to help in a variety of ways, to some extent because so much of the business is reliant upon small businesses. If you have a relatively small athletic footwear and apparel retailer, it will sell Nike products, so there is an indirect benefit there. To what extent do you view established brands such as Nike, or Adidas partnering up with Facebook in this respect?
It sounds like Facebook will have to try to directly engage with larger brands and merchants, because while they might have a lot of engagement on Facebook, there really has not been a close alignment or incentive involving Facebook and these types of companies. Do you think Facebook will make a push for those types of big brands and merchants to come onto Shops, or do you think initially it’s going to really be more focused on SMBs and there will not be much activity from larger entities?
What do you think Facebook can and will do for some of these bigger brands and merchants to get them on the platform and be a willing and active participant? Do they need assurances, incentives, or access to data that they might not have otherwise? What are some things that Facebook could or should do to move this along with those types of possible participants?
Might there be some interplay between Facebook Shops and Instagram Shopping Ads? Do you have any thoughts on Instagram Shopping Ads, how it has been performing, and to what extent could you view what Facebook is doing here with Shops? Is it additive, is it complementary, is it completely separate? It seems to me like you have Facebook on SMBs with Shops and then you have Instagram Shopping Ads seem to be more brand-oriented. How do you think about the interplay between those two?
I think late last year, the company announced Facebook Pay, and talked about partnerships with PayPal and Stripe. Is it your expectation that when this is rolled out, Facebook Pay will be powered by those partners as part of Facebook Shops?
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