I can’t refute Facebook’s value as one of the largest media companies around. They did it. They created a product focused on the end user experience, built an ecosystem of developers and essentially changed the way advertisers market to consumers. However, with the upcoming IPO, I wonder what the future holds out for Facebook.
Recently, General Motors pulled their advertising from Facebook citing it was under-performing, but sugarcoated it with the fact they ‘regularly’ change their media buys and investments. I’m frankly not surprised — aside from unusual timing right before the Facebook IPO.
Advertising is shifting. No longer do one-way broadcasts of an image, logo or message result in sales. I do wonder about the true benefit of Facebook ads for larger brands because it feels as if they force it so hard, results can’t not happen. Brands succeed very well on Facebook organically, from the content they produce and the relationships they have with customers.
GM made a business decision to not throw money and resources at an weak part of the business, but will continue to engage with their audience who interacts with them on their Facebook Pages. They made the headlines for it, but ever since its publication, there has been a domino effect questioning the ROI of advertising on Facebook.
With the upcoming IPO, I’m curious about the long-term growth or vision of Facebook.
The Facebook IPO is cool, but I wonder about the long-term investment. Like what more can they do? They already are the #1 online media co.
— Joseph Manna (Joe) (@JoeManna) May 17, 2012
When Apple was sitting idle at $15 per share, they were becoming increasingly focused on innovation, the market would responded positively by investing in the company. They actually had room to grow. The iPod, iTunes store, App store… and the rest is history with the stock sitting pretty at $534 per share. My point is they had room to grow and take the world by storm.
Facebook is already number one. They could probably add “frictionless-sharing” which translates to annoyed users, more social graph activities and probably more ads, but will that make the company more valuable.Advertising is the only sources of revenue for the company. Advertising works if you are a content provider, but Facebook is much more than content. Hedging all the revenue of the platform on advertising feels like a risky move. It’s a business model that is subject to a lot of outside, uncontrollable variables.
And ask yourself, have you every clicked on a Facebook ad intentionally?
When a company is publicly traded, the leadership of the company answers to investors. Investors care about the bottom line and dividends they receive — not necessarily about the the end user experience.
I hope the IPO does not spell the downward spiral of user experience on Facebook. But even Wall Street tycoons are cautious.
Doom and gloom? Not really. Just not, “OMG! Facebook is going to be so much better in the next year!!”