Tuesday, May 15, 2012


By Carl 

The results of this poll sort of reflect my own feelings and experiences with Facebook:

According to a new AP-CNBC poll, 57 percent of Facebook users say they never click ads or other sponsored content when they use the site, with another 26 percent saying they hardly ever engage in such activity. 

While the company makes money, in part, simply by displaying sponsored content, user clicks are a critical part of an advertiser’s calculus when gauging how effective those ads are and how much they’re willing to pay for them. In the first quarter, Facebook generated 82 percent of its $1.06 billion in revenue from advertising sales.  In the company’s online IPO pitch to retail investors, CFO David Ebersman says the company is working to make ads “more relevant, more social, and more engaging” as it looks to grow.

And while Facebook has been able to decrease its reliance on sponsored content (down from 98 percent of sales in 2009), the hopes of expanding the company’s e-commerce footprint also faces public resistance, the poll shows. A majority of participants (54 percent) said they wouldn’t feel safe using the platform for financial transactions like purchasing goods or services. Only 8 percent said they would feel extremely or very safe in doing so. 

This does not bode well for the long-term future of the company as a public entity. For my part, I'll occasionally click ads to investigate a product more, but I can't remember the last time I've actually bought something off that first click-through.

And "liking pages" allows me to enter contests and keep informed on a particular entity or activity, but usually I find those items in my newsfeed as opposed to clicking over.

There may, in fact, be too much stuff in my newsfeed for me to keep tabs on everything I want to. I don't really need to read the latest Farmville news from friend A, yet the ability to opt out is more work sometimes than its worth. It ought to be an opt-in policy (e.g., if I sign up for Farmville, I ought to be asked if I want to see my friends' activity there, rather than have to go back to my settings to opt out.)

What you'll end up with is a fad: a huge, lasting fad, but a fad nonetheless, with little opportunity to expand beyond its current capacities or abilities. People will get bored.

I think Facebook has plateaued, although that plateau could last a long time. There are some 900 million users and seven billion people on the planet. There's room for growth there.

Zuckerberg probably waited a year, maybe two, too long to issue an IPO. He'll make a boatload of money but the funds to invest in some kind of expansion into some new territory were needed last year: Facebook could have, for instance, partnered with Google to develop a true competitor to the iPad and promised an huge user base with its audience. It would also have prevented Google+ from getting underway -- which has been underwhelming anyway -- and given Facebook a genuine e-commerce stream.

As it was, they took forever to come out with an app for the iPad which is basically just the Safari browser with the Facebook logo slapped on and a pretty shoddy app at that (again, you have to opt out of things like location services and chat).

My suspicion is that Facebook is a one-trick pony, and that the IPO is a recognition that they've done about all they can with it, and it's time to cash in their chips.

(Cross-posted to Simply Left Behind.)

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