) new tool Graph Search that was in beta stage since January will
be rolled out as a full-fledged service over the next few weeks.
The company recently announced its plans to expand the new search
tool to users who use Facebook in U.S. English.
According to Facebook, Graph Search will search for a specific
query among contents that are shared by users and are publicly
available within the social networking platform.
Moreover, the search results can be customized according to
specific time frames, locations or other information that are
available on user profiles.
To make it more effective, Facebook is using
) Bing search engine to deliver additional search results when
Graph Search is unable to find relevant answers. The company also
said that it is working on a mobile version. However, Facebook
did not announce a specific launch date.
Facebook's Graph Search service is expected to increase user
engagement; thereby increasing traffic on the site. This will
bring in more advertisers to the social networking platform,
which will further boost advertisement revenues.
Further, the personalized search service is expected to improve
the company's competitive position against
), going forward.
Facebook has significant growth opportunities from increasing
online advertising spending compared to traditional formats.
According to eMarketer, the U.S. digital video advertising market
is expected to grow 41% in 2013 to $4.1 billion from $2.9 billion
Moreover, eMarketer predicts that the mobile video market is
expected to double this year, touching $518.0 million, which
represents a tremendous growth prospect for Facebook. We believe
that it needs to focus on rolling out the mobile version of the
Graph Search to capitalize on this tremendous growth opportunity.
Although Facebook's mobile monthly active users (MAU's) continue
to grow significantly (up 54.0% year-over-year to 751 million at
the end of first quarter), we believe that increasing competition
from Google and
) remains a major headwind in the near term.
Additionally, increasing investments related to infrastructure
development may hurt Facebook's near-term profitability.
Nonetheless, the continued investments should improve the
quality, engagement and value of its ads, which will further
boost advertiser demand in 2013.
Currently, Facebook has a Zacks Rank #2 (Buy).
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