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  • Writer's pictureJuan Garcia

Facebook news feed changes create a buying opportunity

The more people enjoy their time on Facebook, the more they will spend on Facebook. The more people think that their news feed is full of true things, the more influence their advertisements will have. Facebook is the king of the blow-forward (as opposed to the blow-back), they will take two steps forward and take a mini half step backwards.

If 95 percent of the things you see on your news feed are considered to be true and relevant to your life, due to this "filter bubble" (see video below), then the 5 percent of things you see that are advertisements are more likely to be identified in your subconscious as true/relevant to your life as well, even if they're not clicked on immediately.

Its a fairly common thing in advertising to know that the majority of purchasing decisions are coming from our subconscious.

"A major part of our brain is busy with automatic processes, not conscious thinking. A lot of emotions and less cognitive activities happen,” says behavioral economist George Loewenstein. Our brains usually run on autopilot, despite making us believe we know what we are doing. Thus, our subconscious explains our consumer behavior better than our conscious. 90 percent of all purchasing decisions are not made consciously, experts claim. Or put it this way: brands and products that evoke our emotions, like Apple, Coca-Cola or Nivea, always win.

In the longterm, Facebook is making the right decision. Their advertisements will provide greater value to the marketing consumer, thus they can charge more. All the targeting data they have means its very efficient. Facebook has such a wide base of users basically every demographic is represented.

Other Points:

  • Facebook trades at an attractive valuation when compared to the 5-year historical average.

  • In terms of long-term earnings growth, Facebook is expected to expand its EPS figures at an annualized rate of 26.82% over the next three to five years. This figure alone might prove enticing for investors when coupled with the fact that the use of social media, as well as its share of the advertising market, is set to keep on growing.

  • Facebook is projected to see its revenues soar 42.62% year-over-year to hit $12.56 billion. The social media giant is expected to see its bottom-line surge by 37.59% and reach $1.94 per share.

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