After all had they gotten better results the advertising revenue would no doubt have been raised, but FaceBook results have prompted a swift depart from this, and what is the reason?
Well I know the main factors that have caused this and will continue to cause this mass departure.
1. The FaceBook founder Mark Zuckerberg continues to see FaceBook as a bit of a social project with no idea of social media and how to profit from it, there has never been a real business model behind facebook. The pure success of FaceBook has been almost due to luck and being in the right place at the right time, as Mark started FaceBook whilst still at Harvard, and although he failed to complete his studies he gained so much more, as he had a ready platform of fellow students willing to try his new toy. this lead to huge online traffic and users. Had he started FaceBook and not been at Harvard (or uni in general) the success would be no where near as big.
2. The FaceBook team continue to lack some basic understanding of business fundamentals, and unlike their Google counter parts they dont really know how marketing and business work together or even who they are targeting, and it is for this reason that the advertising model of FaceBook doesn't work. There is no real integration between FaceBook advertising and the users, and as such putting all your revenue on this will be the downfall of FaceBook unless something is done about it
3. Advertising and Socialising just dont mix. FaceBook must remember that it's main goal in the world is a social network, and although advertising can play its part in this mix, it must be done to not have adverse effect on the overal goals. For example the recent addition of adverts into peoples timelines is more invasive than useful, plus there is no real connection behind the adverts. Even if they were linked to the sorts of things I like that would be a good start, instead I have been greeted with adverts for all sorts of things I just dont care about and in a place I dont notice. Remember FaceBook people using FaceBook are in a different mindset to those who are searching on Google. Simple Social vs Purpose.
So it is in my not so humble opinion that unless FaceBook pay attention to the fact they have lost a large advertiser in GM, then I see this FaceBook bubble about to burst. I think in short the solution lies in a few simple things.
- FaceBook adverts need to integrate more into the social experience and be more relevant to my interests, likes, etc
- FaceBook needs to remain social as its core function, as unlike google people use FaceBook for socialising and this is the key to revenue and success.
- The business model needs to be taken seriously and although having huge sums of IPO money thrown at it doesn't make it work.
- I feel the adverts need to give advertisers better value for money, for example why not integrate adverts into the way people use FaceBook, such as maybe an advert between processes, such as before I view a picture, a page or similar, something like a full page advert would be a better integration without being invasive and be much better value and make use of the huge screen real estate FaceBook has. This could even be done in the form of the FaceBook Dialog boxes with adverts in them.
- Other large advertisers will pull out of FaceBook Advertising, leading to an increase in Google advertising revenue.
- FaceBook will need to go back to its roots to regain market share and find an identity.
- I expect FaceBook's IPO to get a bit of a lack luster start, and by the end of trading the share price may even be lower than at the start.
- It is also my prediction that the actual value of FaceBook will fall to nearer the $50 billion mark and the share price will fall and stay at under $30 in the mid $20s, actually round about the original price before the increase in the IPO offering, leaving hundreds of traders out of pocket.
But in all honesty as I use FaceBook and think the work Mark and his team has done in such a short period of time I take my hat off to him. But just sending this little warning, as its like the old saying goes "if you look after the pennies the pounds will take care of themselves".
Thanks Sean J Connolly
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