On Tuesday’s third-quarter earnings call, Facebook CEO Mark Zuckerberg made clear his belief that stories — posts that he simply described as ones that disappear but are commonly known as being vertical and mobile — lie at the heart of the company’s future. And while investors have heard Zuckerberg describe Facebook as being mobile-first, people-first and video-first, this new pitch seemed to combine it all together and had listeners thinking of one word: Instagram.
“I walked away thinking they believe the future of online advertising is story-driven and heavily tied to commerce, and both of those seem further along on Instagram than on Facebook. Maybe the answer staring us all in the face is Facebook will be dwarfed over the next 10 years,” said Rich Greenfield, an analyst at BTIG.
Facebook’s stories are still new, Zuckerberg stressed on the call, but the evidence of the format’s strength is clear through the success of Instagram. More advertisers are buying ads in Instagram Stories and part of that stems from ease of use, media buyers said. Facebook’s Ads Manager lists ad formats across Facebook and Instagram, and buyers can simply check boxes of where they want their ads to appear. The system can change the creative to fit each format as well as track individual performance. Boxes for Instagram Stories and Facebook Stories were added earlier this year.
“If you’re creating a quick video ad, [Instagram Stories is] more or less a click of a button within ads manager. It’s not that it’s more expensive and you need to set aside [budget]. We have the freedom to optimize in real time and really find our consumers where they are versus forcing a budget,” said Joe Mingino, executive director of digital activation at Omnicom’s PHD.
When ads in Instagram Stories were introduced, brands divided their budget for Facebook ads into three buckets: Facebook News Feed, Instagram feed and Instagram Stories. Now, it’s one placement and can be adjusted at any time. During Tuesday’s call, Facebook COO Sheryl Sandberg said Pandora has been using these so-called automatic placements. According to Sandberg, that buying method has resulted in a 10 percent lower cost per view than their standalone campaigns.
Facebook’s system is so simple and efficient that it has one buyer even less interested in Snapchat than he was before.
“I don’t advise Snap. For all of its faults, I like Facebook reporting too much to get away from it,” said Joe Leverone, a programmatic media buyer at excelerate Digital.
While marketers often critique Facebook and Google for their walled gardens, the strength of Facebook’s targeting due to its tightly held data has made Instagram Stories more appealing. A buyer at a global media agency said Instagram Stories is a format almost every brand should be using.
“It ties back to Instagram is growing faster than we can keep up. You can leverage all of the targeting across the board, and that’s fantastic given all the data they have with all their users,” he said.
Still, marketers were hesitant of the transition of Facebook being a stories-first company. Feed still is the vast majority of PHD clients’ budgets on Facebook’s platforms, Mingino said. He predicted that would not change any time soon due to differences in the formats.
“There are things that you can’t do in Stories just yet. It’s for quick three- to five-second snackable video: This is who we are, this is what we want to sell, watch this, buy this. But if you want to sell in five to 10 seconds, include GIFs, static images, carousel, dynamic product ads, there’s feed,” Mingino said.
As for Facebook Stories, the format has yet to show its worth. While some brands are finding success in part due to low CPMs in the auction, the media buyer at a global media agency said his team has tested it but was not impressed by the performance. There’s some audience there, he acknowledged, but it isn’t worth their budgets, yet.
“We’re not 100 percent sold on [Facebook Stories]. That’s not saying that the next month we might not click it for everything. It’s a ‘wait and see’ rather than jump on it,” the buyer said.
That hesitance to advertise on Facebook Stories comes even amid scale. Facebook Stories has 300 million daily active users, the company reported in September. Meanwhile, Snapchat has 188 million daily active users overall, as of August. Instagram Stories is leading with 400 million daily active users, Facebook reported in June.
One way Facebook could make Facebook Stories more appealing is providing more case studies from early tests, the buyer said. Sandberg shared one from Furbo, a company that provides dog cameras, during the earnings call. According to Sandberg, Furbo ran ads in Facebook Stories and Instagram Stories — targeted to people with dog-related interests and excluding people whom they’ve determined have already purchased the product — and had 20 percent more leads than its other digital campaigns.
Sandberg said her team has more case studies, but overall it seems that the company is taking things slowly rather than flooding Facebook Stories with ads.
“We’re following our normal playbook here of building out the best consumer products first and focusing on succeeding there before ramping up ads,” Zuckerberg said on the call.
Greenfield of BTIG said his impressions of Zuckerberg’s call was that there’s a lot of potential for ads across Facebook. As analysts are often concerned with ad load, Zuckerberg mentioned several places where ads are not even appearing yet, including WhatsApp’s version of Stories called Status and Instagram Explore.
“There are so many things they’re working on that are really early, and while not having the rapid growth [of earlier years, Facebook is] definitely not collapsing,” Greenfield said.