It feels like I haven’t written in a month! Oh that’s because I haven’t! Anyway, what better topic to re-open the flow of blog posts than one about Facebook?? As we all know, Facebook launched its IPO last week in an attempt to raise billions more than they were already worth (according to estimates), but from the very beginning, analysts were questioning the legitimacy of Facebook’s value. I mean seriously, how can you really gauge the value of an Internet company that doesn’t have a constant stream of revenue? Well, it seems the value of Facebook is relative to the amount of users actively on the site mixed with the real-world numbers of how much traffic and advertising Facebook is capable of receiving and displaying.
At any rate, I bought into the hype when the stock prices were rising to their $45 peak. I was able to get in at $41.65 per share only to be seriously disappointed when the price quickly began to fall. As of this morning, Facebook is sitting around $33 after opening at just $30!! I’m no ‘stock guy’ so I’m not here to give financial advice, but after reading news reports about how Facebook isn’t a good investment and hearing from the Internet crowd that “Facebook sucks” or “Facebook has had its day”, I began to wonder if my own original opinions on the company were true.
I’ve been on Facebook since sometime in 2004 after MySpace began to quickly lose its members. I can remember thinking that MySpace was for kids and musicians and Facebook was more clean-cut and designed for “real” networking among the adults. Today, I find myself really only using it to help promote this site and other various projects I work on. Every now and then I’ll post some new pics or check in somewhere, but overall, I’ve lost interest in updating all my friends on my current status. Facebook has become nothing more than a promotional tool for everyone and their little home-based businesses (mine included). How many times have you gotten a message or wall post asking you to like your friend’s new company page?!
The point is we all know Facebook has over 600 million active users, but does this number really matter if you’re not even friends with all 600 million? Not generally, but it does if you’re running advertising campaigns. As an Internet user for well over 15 years, I have seen the web change dramatically in terms of web design and advertising and no matter how you look at it, every form of advertising has died a slow death after the people caught on to the tricks. For example, pop-up windows used to be the number one money maker for marketers because it offered the ability to display an ad right in front of what the user was just looking at. When they were new and innovative, people generally clicked on them hoping to score a deal somewhere. Nowadays, just about every web browser has a pop-up blocker built in to keep those ads away.
Then advertisers moved on to banner ads. These too were highly effective in the beginning because they usually stood out from the rest of the content by either flashing, changing colors or even making sounds. When these were new, web users simply couldn’t look past them because they were so flashy. Today, we have all become so used to these ads that we’ve developed a sort of banner-blindness to them. We have the ability to pull content out of the page without even looking at one ad because we’ve trained ourselves to find the text and images we want rather than ads sitting over on the sidebar or at the top/bottom of the page. Just take a look at my site and see if you can spot the ads!
There are many other types of advertising, but I think I’ve made my point. The problem with Facebook is that its users are using the site more on their mobile devices than on their computer. This just makes logical sense considering the whole point of Facebook is to be mobile. But if you can see one major difference between the mobile app and the desktop version, you’d notice the lack of ads on the mobile side.
Quite simply, this is because Facebook hasn’t been able to properly advertise on the mobile platform. It’s a combination of screen size and the multitude of differences between devices and operating systems that is causing this problem.
According to BBC News, Facebook has started testing a new option for users who use Facebook to advertise. Much like Twitter did a while back offering promoted tweets, Facebook may soon allow users to promote status updates and wall posts…for a fee of course. These tests are trying to find out if Facebook users are willing to pay to have their posts given priority placement (highlighted) among the other millions of status updates that happen every minute. Users are reporting that a “high” price for post highlighting is around $2 while cheaper posts are around $0.25.
There’s no word yet if these paid posts will actually be shown beyond your own friends list, but I imagine if you’re spending upwards of $2 just to highlight your post, you’d want it to extend further up the user chain. This whole process may work just like the current advertising model which allows you to buy ads on the sidebar much like you can with Google by buying ad space in search results. The difference is instead of your ad displaying in a space reserved exclusively for ads, it will be displayed as a general comment or wall post and get higher placement than other mundane (free) posts.
My two cents
I’ve always liked the idea of paying for placement because it represents capitalism at it’s best…if you want it, you can buy it. However, in this case, it seems like Facebook is going too far. Currently, when you post a wall or status update, your intention is to tell your friends something. Is it fair for me to come along, pay a fee and have my spammy advertising post to be placed above yours? Fair it may be, but lousy it is. The worst part is that something that once was free will eventually have a fee. Once all of the big advertisers get a hold of this feature, you may never see posts from your friends again! Imagine logging into Facebook and all you see are hotel deals in Las Vegas or links to crappy ebooks that tell you how to become a millionaire while you sleep.
I don’t know how it’ll all work, but I already don’t like this idea. As for the stock, I sold my shares and will probably wait a month or so until I re-buy…if I do at all!