About 2 1/2 years ago, Facebook (NASDAQ:FB) CFO Dave Wehner warned investors that the social network powerhouse may see a slowdown in revenue growth after maximizing its ad load in the News Feed product. To help mitigate the impact of slower ad-impression growth on its core platform, Facebook spun up ads on Instagram. "In 2018, we benefited from strong impression growth on Instagram," Wehner told investors during Facebook's fourth-quarter earnings call.

Check out all our earnings call transcripts.

But it appears Facebook has quickly maximized the ad load in Instagram feeds as well. Wehner told analysts "we already have healthy ad loads" on the Instagram feed, on both the earnings call and a follow-up call later in the evening.

Facebook was able to quickly grow its Instagram ads business because they're very similar to ads in its News Feed. Now Facebook's revenue growth will come mostly from growth in Stories ads across its family of apps. Here's what that means for investors.

A person holding a phone displaying Instagram

Image source: Facebook.

A whole different beast

The transition from Facebook feed ads to Instagram feed ads is pretty straightforward. For the most part, the ad units function the same. Advertisers can use the same creatives across both Instagram and Facebook.

The transition from feeds to Stories might not go as smoothly. Facebook is certainly doing a lot to help, though. It's developed an automatic placement system and ad format that takes existing content from marketers and automates the creative process for Stories ads. So far, it's been able to get 2 million advertisers to actively use Stories ads. Facebook says it now has 7 million active advertisers on its platform, and it last said Instagram had 2 million as a stand-alone service. That's a very impressive number.

Advertiser adoption is just part of the puzzle, though. It'll take time for both advertisers and Facebook to maximize the value of Stories ads. In the meantime, ad prices are considerably lower for Stories ads than feed ads. The impact of those lower ad prices showed up in Facebook's fourth quarter, where it reported a 2% drop in average ad price.

The impact for investors

As lower-priced Stories ads account for a greater percentage of the growth in ad impressions, revenue growth is going to decelerate. Wehner said he expects deceleration in the mid-single-digit percentage range in the first quarter, with continued deceleration in each subsequent quarter throughout 2019. That implies revenue growth of just 20% to 25% for the year. That's roughly in line with analysts' previous expectations for about 24% revenue growth.

Facebook's Stories ad prices will remain relatively low throughout 2019. Wehner said: "While I do expect that we'll bring more advertisers to Stories and we'll bring more advertising formats to Stories and that will create more demand for Stories, we're also growing Stories inventory quickly, so those two things will balance out in price."

Ultimately, however, demand growth will start to outstrip supply growth. It's a pattern that has already played out in the shift to News Feed ads, mobile ads, and Instagram feed ads. As long as Facebook can continue delivering superior return on investment for ad spending compared to its peers, that ought to eventually translate into higher average ad prices for the company.

As marketers' dollars start to catch up with user activities on Facebook's family of products and Facebook limits the growth in ad supply, investors should expect ad revenue growth to turn back around. 2019 will be a transition year, but Facebook has shown it's capable of navigating these transitions and coming out stronger than before.