Facebook Inc. (FB) is revamping its News Feed with bigger photos, splashier graphics and new tools for organizing content, seeking to make the site more valuable to advertisers without upsetting users resistant to change.
The company unveiled yesterday a redesigned News Feed, the first thing members see when logging onto the world’s most popular social network. The update, which includes new ad designs and offers more consistency across devices, is also aimed at sustaining Facebook’s lead over Twitter Inc. and Google Inc. (GOOG) in social media.
Under pressure from investors to generate more revenue from Facebook’s more than 1 billion users, Chief Executive Officer Mark Zuckerberg has been adding services and features to keep people logged on longer and more often, especially via mobile devices. The company sometimes encounters opposition to changes from users concerned about privacy or unwanted ads, as well as those who simply like the site the way it is.
“Any change is upsetting to people because they become used to the way things have been done,” said Greg Sterling, an analyst at Opus Research based in San Francisco. “We don’t know how they’re going to treat ads in this mix, and there may be some issues there. On the whole, I would say these are positive changes.”
Facebook declined 1.6 percent to $28.13 at 9:42 a.m. in New York. While the shares have pared some losses after touching a record low in September, they’ve lost about a quarter of their value since a May initial public offering. Still, Facebook is valued at 50 times projected earnings for the current year, compared with a price-to-earnings ratio of 18 for Google, according to data compiled by Bloomberg.
“As the world changes, the composition of News Feed changes as well,” Zuckerberg said at yesterday’s presentation at Facebook’s headquarters in Menlo Park, California. “We think there’s a place for a personalized newspaper that can bring these things together.”
Content attracting attention from friends will be more prominent on the site as well. Users will also be able to filter feeds by category, such as music, events, photos and content they follow on the service. Advertising will probably be added to these specialized feeds over time, Zuckerberg said.
“The News Feed is core to their monetizing strategy because targeted advertisements go into the News Feed,” said Tom Forte, an analyst at Telsey Advisory Group, based in New York. “The long-term opportunity, or challenge, is to make advertisements more like content.”
Another new design element is the addition of the navigation bar for mobile devices to the desktop version. The feature uses colored icons for easily switching between services on the site.
By making the News Feed on desktops and laptops similar to what users will see on smartphones and tablets, Facebook is aiming to offer a more consistent experience and tap into faster growth on mobile devices. In the fourth quarter, mobile revenue made up 23 percent of Facebook’s total ad sales as the number of users on smartphones and tablets outpaced desktop users.
By allowing users to filter their news, Facebook is also making it more difficult for companies trying to promote themselves without paying for direct advertisements, said Kim Celestre, a marketing analyst at Forrester Research Inc. (FORR)
“It’s going to be about a shift away from organic marketing to paid advertising,” Celestre said “For companies that are paying for ads, it will benefit them.”
Facebook in January unveiled Graph Search, designed to make it easier for users to find friends, restaurants, locations and interests based on their social connections. Facebook also is developing a smartphone application that will track the location of users, two people with knowledge of the matter said last month. The app is scheduled for release by mid-March, the people said.
Changes to the News Feed, a feature that’s front and center whenever users log into the social network, haven’t always gone smoothly. The last major revamp to News Feed in September 2011, which changed the design and accessibility of posts, sparked a minor backlash by users who said it cluttered the page. Even as far back as 2006, two years after Facebook was founded in Zuckerberg’s Harvard University dorm room, users protested an update to the feed, saying that a feature allowing other users to track updates was too intrusive.
“This design reflects the evolving face of your News Feed,” Zuckerberg said. “It’s designed for the way that we’re all sharing today and the trends that we see going forward.”
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