Image via Robert Scoble

News of Facebook changing the way newsfeeds will begin to display video advertisements has provoked some skepticism and even backlash, yet this is probably just a test, one that might not even last depending on user engagement. It’s important to keep in mind that Facebook, like Google, is also making long-term moves to grow beyond advertising, and using its advertising revenue (while it lasts) to test projects in different sectors. In Facebook’s case, the ultimate goal is probably to turn the social network into something much more ambitious than a mere platform for ads.

Facebook knows they can't be the cool kids in the social space for much longer -- hence the $3B offer for Snapchat to stay relevant among a younger demographic. But if Facebook can keep making ad revenue from as many different avenues as possible now, while expanding its collection of user data, then it can deepen its pool of talent and cash to build network infrastructure to compete with companies like Google and Amazon. And to succeed well past their social days, they’ll need to diversify or risk joining the ranks of AOL.

That seems to be Zuckerberg’s end game. A recent Wall Street Journal article following the company’s investment in global network infrastructure signals such a long-view play. Branching out makes sense for a company of Facebook’s size. (Look at how Amazon used retail revenue to build a cloud storage empire.) And such changes are beginning to scare more established telecoms. Facebook's goal is to “connect everyone on the planet” through their software, but in order to make sure that people all over the world are using that software, the company is making sure they have control over the physical infrastructure needed to deploy the brand.

Facebook’s stock is up 1.8% following the video advert news, climbing to near record heights. And a report from earlier this summer placed the company’s market value at $100B thanks to the expansion in mobile advertisement. So for now, the potential changes coming to video advertisements within the social network are worthy of dissection -- but looking three to five years ahead, they’ll likely be a minor footnote in the company’s much larger history. By then, we might not even describe Facebook as a social network, but as a global communication service.

Comment