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Advertising
Facebook (FB) has become a global advertising behemoth, with it and Google (GOOG, GOOGL) accounting for 85 cents of every new dollar spent on digital advertising.
But the company's ambitions go far greater than just making money off ads -- it wants to control every thing you do and then some, with a better than average shot of succeeding.
Aside from mobile advertising on its News Feed and Instagram, perhaps the biggest opportunity Facebook has is in messaging.
Messaging
Facebook Messenger is consistently among the top 5 apps in the App Store and is approaching 1 billion users. The messaging space has never been hotter and Facebook is taking full advantage of that, with extensions like bots, the ability to order an Uber straight from Messenger and eventually, something called M, which will be Facebook's artificial intelligent assistant that can perform tasks for you, like booking your favorite restaurant or a hotel.
Then there is WhatsApp, the Facebook-owned messaging platform that dominates the rest of the planet, including in Asia, where it competes with WeChat, Line and others.
WhatsApp, which has already surpassed the 1 billion monthly active user mark, is slowly but surely becoming the place for customer service on your phone. The text messages you get from your bank or your wireless carrier showing a bill due seem to be migrating towards WhatsApp, according to this company blog post earlier this year. WhatsApp will eschew traditional advertising on the platform, so it needs to justify the $19 billion in cash and stock purchase price somehow, with customer support and service looking like an increasingly viable option.
Connectivity
The third opportunity Facebook has sitting right in front of it is connectivity, with components like lasers, drones and this futuristic looking plane that looks like a bomber which can beam down Internet to areas not currently capable of having high-speed internet.
It's unclear what the business model for connectivity will eventually be, but looking at Alphabet's Google unit can give us a bit of an idea.
Google Fiber offers incredibly high speed internet and television connectivity for prices much lower than from traditional broadband providers, like Comcast, Verizon, AT&T and others. Google Fiber is rapidly causing these companies to rethink how they lay out connectivity lines, which could be something Facebook is thinking about down the line.
Virtual Reality
Then there is the opportunity in virtual reality (and eventually augmented reality) that Facebook is just starting to monetize right now, in the form of Oculus and Oculus Rift.
A quick check on the Oculus Rift order page shows that it is back ordered until August, despite having been released for sale in March. At $599 per unit (people are only allowed to order one), nearly every review says it is a life altering experience for the better, even if it's not something that is a MUST need right now.
It's unclear how many units Oculus has sold and with the revenue not material yet (in order for Facebook to legally break it out, the SEC has some definitions on what is material), we may not know for a while how many units are sold. To give us some idea though, the $99 Samsung Gear VR, (which uses Oculus' software), was one of the top selling products on Amazon during the 2015 holiday season.
As the price of the Oculus comes down, more and more content is added to the Oculus Store and the design gets sleeker, Oculus may wind up being as important an acquisition as Instagram was several years ago, if not more important.
Video, Facebook Live
The last opportunity Facebook has might be the largest of them all -- Facebook Live and video.
Facebook Live is radically transforming how media companies, individuals and others communicate with each other. Things like the watermelon destruction by Buzzfeed or Chewbacca Mom have the potential to go viral, being seen by tens of millions of people, audiences that advertisers would kill for.
Even now, Facebook Live is being used on the floor of the U.S. House of Representatives as Democrats stage a sit-in.
Engagement rates on Live video are through the roof, with users commenting in real-time and now and then, the people creating the video responding. Actions like that are incredibly useful and important for advertisers, who are willing to pay extraordinary sums of money for that type of audience.
There you have it -- five reasons why Facebook's future is as bright as its past, each one bigger than the next. CEO Mark Zuckerberg and team have taken the company from a place to look at your ex and cute baby photos into a true utility for the 21st century and with Zuckerberg still in his early 30's, it's highly likely there will be plenty of more opportunities to come.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
