Facebook Inc has begun seeing the expected consequences of the recently implemented news feed changes that prioritizes more meaningful conversations and posts. On the flip side of it, the number of people in the US and Canada using the social network has declined by a million. But the company has predicted that its ad sales would soon soar to new highs following the tweak.
Facebook chief executive on Thursday announced the company's Q4 2017 earnings report and revealed that duration of time spent on the social media platform drastically plummeted by about 5 percent per day in after-hours trading. Facebook currently has 1.4 billion users.
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"Already last quarter, we made changes to show fewer viral videos to make sure people's time is well spent. In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day," says Facebook chief executive Mark Zuckerberg.
In the US and Canada alone, the reduction went up to 700,000 compared to Q3, totaling 183 million daily active users. This is the first decline in any market by the social networking company. Northern American has been one of the most profitable markets of Facebook where average revenue per user is pegged at US$26.76, way bigger than the global average of US$6.18.
Chief financial officer David Wehner says he believes this is a fleeting decline and will not go for long, stressing that even if there was no 700,000 reduction in the US and Canada, user growth will still fall at 2.24 per cent.
Meanwhile, Wedbush analyst Michael Pachter says the decline has not essentially affected Facebook in terms of ad revenues.
"They said average revenue per ad was up a lot, that quality of ads has improved, and that the engagement declines were not meaningful," Pachter told Reuters. "In other words, better quality engagement and better ability to target ads. The street probably likes that."
