Facebook is now officially a public company and, if your office is like ours at Stealing Share, its recent IPO has been a hot topic of discussion.
Our general conclusion is we just don’t get it. And maybe Wall Street doesn’t quite either, as the initial stock offering rose, then fell right about where it started. (And it’s down today.)
The issue is that Facebook has hit its ceiling. Where is it to go now? It has more 550 million users and is, essentially, the only social networking site of its kind. That’s because any user would only want a site that has everybody. Facebook has ‘em.
Facebook primarily makes it money through advertising, something that seems only mildly effective for its advertisers. General Motors recently pulled its $10 million worth of advertising from Facebook and a recent study, conducted by Greenlight, found that 44 percent of Facebook users have never or will ever click on an ad.
I’ve never been a big fan of online ads, although I think their value is as a billboard rather than a click-thru. The ads in online publications for the iPad work better because you can’t miss them and most have interactivity in them.
Facebook has data on its consumers that retailers are panting to buy, giving them the holy grail of advertising because you can precisely target consumers with it.
But Facebook, as a brand, has always been about less intrusion. Facebook is the place where you, the user, control the experience. It was set up and still lives as a kind of meeting place where Facebook stays out of the way.
I am supposing Facebook is looking elsewhere for future profits. A user fee is out of the question and would be lethal for its brand. There might be other retail options such as selling products, ala Amazon, or even virtual products like games or streaming movies. Or it could even take on Google and become an effective search engine because it already knows so much about you.
But the brand of Facebook wouldn’t allow many of those, unless they are on the level of Farmville and such. Facebook is the brand of the user, which is why it has so much power. Becoming more retail-oriented, feeling more like other sites only powered by user preferences, sounds good in theory but it flies in face of the Facebook brand. It’s these kinds of missteps that lead to the failure of many dotcoms, especially as they are trying to increase profits to please shareholders.
Therefore, the question still exists. What does the future hold for Facebook?