So, you’re a company that thrives primarily on advertising. You’re about to open up your IPO to the world, and in fact are now demanding more money per share.
Do you really need a major company like GM yanking $40 million a year in advertising buys, stating that basically those ad buys have no impact?
No? Tough, Zucks, it’s happening anyway, and they’re not the only ones thinking about it.
Industry analysts have recently reported that companies are beginning to re-evaluate social media-based advertising. “Companies in industries from consumer electronics to financial services tell us they’re no longer sure Facebook is the best place to dedicate their social marketing budget—a shocking fact given the site’s dominance among users,” wrote Melissa Parrish, a Forrester analyst, on Monday.
An analyst quoted in the Ars Technica piece block-quoted above replies by arguing that Facebook offers more data, but nobody can agree on the value of it or how to interpret it, and once they do, Facebook’s inflated value will be justified.
What nobody is actually saying here is that Facebook is a terrible platform for ads. For a company that knows everything about its users, it’s pretty awful at marketing to them. Just ask Nick Bergus, better known to the Internet as “Lube Guy” — he unwittingly became a pitchman for a 55-gallon drum of lube on Facebook. Everybody’s got a weird Facebook advertising story — there was about a six month stretch where all I got from Facebook were ads about cereal and cars in Spanish, which is weird since I’m not of Latin descent and don’t speak Spanish.
That’s really the key problem here: Facebook has enormous advantages as a company, but it also has significant weaknesses — and we can expect those to become more and more visible as it becomes a publicly traded company.
(Image courtesy David Berkowitz on Flickr)
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