Let’s face it, Facebook is f…..ed!

 

 

They say that a man’s downfall is either the love of women, money or power. Well Facebook had lots of power but it was the money that is its current downfall. Its share price has halved – now $19, was $38 in May – after the market has woken up to a simple fact – they over claimed their future advertising revenue.

 

So is Facebook finished?

 

The problem comes, as most of as ad folk probably know; they can’t monetize Facebook on mobiles. The ads don’t work. And they aren’t working that well online either. In the last year several high profile brands jumped ship.

 

Now Mark Zuckerberg is no longer in charge, it’s the investors who will be taking over in a desperate attempt to squeeze extra advertising revenue. But here lies two problems, firstly there’s only so much ad budget about and sexier things like pre-roll video is attracting the attention of media buyers. Let’s be honest, digital media is as much about trends as it is about effectiveness.

 

The second is that Facebook members don’t want the ads. I, like many others, have Mozilla AdBlockerPlus so I don’t get any ads on Facebook at all (wonderful). Facebook already suffered a backlash when they tried to over step the line before with its Beacon ad model.

 

The news, which even made the front page of the Metro, that advertisers will be able target Facebook users more directly by posting adverts onto their news feeds begs the question, “why would that be effective?”

 

Not only will it annoy Facebook users but also probably do brands more harm than good. A recent poll has revealed that over 50% of Facebook users think the site’s ads are already too intrusive.

 

The problem is that too many people outside of the ad business have an outdated view of how ads work. They are still working to the disruptive, intrusive model of the 90’s that the web age threw out.

 

Also, as if that wasn’t bad enough, Facebook have reporting a $157m loss in the second quarter. I admire some people’s optimism, claiming Facebook can make massive ad revenue, quoting Google, but I think it’s ill placed.

 

The problem now lies in who calls the tune? Are Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman really in charge any more? Investors like Goldman Sachs will want to protect their client’s money, and not look idiots as well, which means the moneymen will be giving the orders.

 

And as we all know, they know the cost of everything but not the value, and here lies the key to the demise of Facebook.

 

Mark Zuckerberg built it on values, believing in its power as a vehicle to connect and unite people. He understands people, their values and their likes and dislikes. You won’t get that from the bankers. They’ll squeeze it like a lemon which will result in it’s members going the same way members of MySpace, Bebo, Friends Reunited and many other have gone. Away.

 

In the online world, you can rise quickly and fall quickly. Consumers can jump ship over night and follow the new trend easily. And even putting Facebook’s financial troubles aside, there are those that question how long it can survive before the next new thing comes along. Already it’s loosing members in the US and UK and younger generations are always looking for the new thing and certainly not the thing their parents are on.

 

I think in five years time we’ll be saying, “remember how big Facebook got, how great it was, then they sold out and the rest is history”. Except we won’t be posting that on Facebook but on the next new social media phenomenon.

 

#facebookisfinished

 

  • Chris Arnold

    I’d like to thank John Davis for his comment on this article and for putting forward a different viewpoint. With any blog I think it’s important that we should discuss and even debate views and beliefs. We live in a world of little real predictability, so having more than one view is enlightening and healthy. Where would politics be without different views? There is rarely one right answer.
    http://johncomms.posterous.com/a-response-to-lets-face-it-facebook-is-fed-ch

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