How would you decide between showing more ads on the Facebook Newsfeed vs showing a "People you may know" recommendation widget?

Introduction

The trade-off between showing more ads on the Facebook Newsfeed versus displaying a "People you may know" recommendation widget is a critical decision that impacts user experience, engagement, and revenue. This scenario involves balancing immediate monetization opportunities with long-term user growth and retention. I'll analyze this trade-off by examining the context, potential impacts, and data-driven decision-making process.

Step 1

Clarifying Questions (3 minutes)

• What's the current ad load in the Newsfeed, and how does it compare to industry benchmarks?

• Why it matters: Understanding the current ad saturation helps assess the potential impact of increasing ad frequency.
• Hypothetical answer: The current ad load is 1 ad per 5 organic posts, which is slightly below industry average.
• Impact: If ad load is already high, increasing it further might lead to diminishing returns or user backlash.

• What's the current performance of the "People you may know" widget in terms of user engagement and network growth?

• Why it matters: This helps evaluate the effectiveness of the widget in achieving its intended goals.
• Hypothetical answer: The widget has a 5% click-through rate and results in 2 new connections per user per month.
• Impact: Strong performance might favor keeping or expanding the widget, while poor performance could justify its replacement.

• What are the current user retention rates and how do they correlate with ad exposure and network growth?

• Why it matters: This information helps understand the long-term effects of ads and social connections on user retention.
• Hypothetical answer: Users who see more ads have 5% lower 30-day retention, while those who make more connections have 10% higher retention.
• Impact: This data would strongly influence the decision, potentially favoring the option that boosts long-term retention.

• What's the revenue model for Facebook, and how significant is ad revenue compared to other sources?

• Why it matters: Understanding the business model helps prioritize between short-term revenue and long-term growth.
• Hypothetical answer: 90% of revenue comes from ads, with the remaining 10% from other sources like marketplace fees.
• Impact: High dependence on ad revenue might push towards increasing ad load, but not at the expense of user engagement.

• Are there any upcoming product launches or strategic initiatives that could be affected by this decision?

• Why it matters: Aligning with broader company strategy is crucial for long-term success.
• Hypothetical answer: There's a plan to launch a new feature for discovering local events and businesses in the next quarter.
• Impact: This could influence the decision, as the "People you may know" widget might synergize well with a local discovery feature.