) has entered into a partnership with leading TV ratings
Nielsen Holdings NV
) in order to measure online viewership.
The association between Facebook and Nielsen dates back to 2010
when they had partnered to collect data about which online
advertisements were watched in similar fashion from desktops and
laptops. However, since mobile tracking is more difficult, it took
a while to start.
Per the alliance, going forward, whenever a Facebook user watches a
TV show on his mobile or tablet, the social media giant will
automatically come to know about it. This tracking will be enabled
only on those devices that are logged into Facebook. The company
will then scan the demographic statistics of the particular user
and send the data to Nielsen.
This, in turn, has raised privacy concerns in the U.S. However,
Facebook has refuted all of these allegations and claimed that the
identities of individual users will not be disclosed as per the
terms of this alliance.
Per the deal, the information that Facebook receives will be in the
form of a unique code. The information that Facebook supplies to
Nielsen will be in an aggregate so that the identities of the
individuals are not revealed.
This is not the first time though that the social media giant has
been accused of privacy breach. Recently, Facebook drew a lot of
criticism when the results of an experiment conducted by it in
2012, to influence the moods of its users, were revealed in public.
Facebook's initiative to match TV shows that Americans like
alongwith their demographic stats are intended to help marketers
create better-targeted and more-efficient advertisements. This will
help the company to fetch more ad revenues going forward.
Per EMarketer, the U.S. market for digital-advertising is set to
grow 42.0% in 2014 to $5.96 billion. According to Gartner, ad
market spending is expected to hit $42.0 billion in 2017.
This partnership is not Facebook's first attempt to access online
video stats. Recently, it had acquired LiveRail, a startup that
specializes in the delivery of online video ads to desired
demographics. We believe that Facebook's strategy of acquiring
startups to target ads will beef up ad revenues going forward.
As Facebook's ad business matures, top-line growth is expected to
suffer. Facebook's rapid pace of acquisitions is also expected to
weigh down on profitability and cash balance in the near term.
Intensifying competition from the likes of
) remains a major concern.
Nevertheless, we believe that Facebook's growing mobile user base,
Instagram's increasing popularity, frequent launch of new products
and international expansions will boost the company's top line and
profitability going forward.
Currently, Facebook has a Zacks Rank #3 (Hold).
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