I wanted to keep this to myself –if you don’t have anything nice to say, don’t say anything at all — but here is my contribution to the pile of B.S. spreading today on the occasion of Facebook going public.
Facebook is over, about to topple over under the weight of a spectacular overvaluation, mass indifference to financial fundamentals, and most importantly my sense of the growing indifference of the generation it was supposed to serve — college students. Facebook was famously founded as a digital replacement to the printed freshman directories of the Ivy League but has become obese with the inane status updates and vacation bragging of those same students’ parents. My generation. The one’s who pored over the original class directories in the 1970s and “posted updates” on whiteboards glued to our dorm room doors.
Wall Street is selling scale today when the trigger is pulled on Facebook at 11 AM EST — that’s dot.com hyperbole for “lots of traffic” — and while your local investment club may be all atwitter with the prospect of buying some shares, and it’s fun to count the herd of new Facebook gazillionaires now shopping for new Colnagos and bespoke skinny jeans — the smart money has been cashing out for a long time in the private market and will continue cashing out quickly at the top. This is not Microsoft in 1984 nor Amazon in 1996. This is not a long term bet on a significant new way of doing business or even communicating. This is an investment in the 2012 edition of CompuServe and MySpace: yet another walled garden ripe to get creatively destroyed by the next big technical thing lurking over that hill known as the future.
Future performance of Facebook’s stock depends on the company delivering profitable revenue and like Google, Facebook gets all of its money from advertising. Google builds semi-useful stuff and search is everything. Facebook advertising does not work. I managed Facebook campaigns for a Fortune Global 100 company and have first hand experience that … Facebook …. Advertising …. Does….. Not ….. Work.
General Motors figured this out, and picking the week of the IPO to announce Facebook ads aren’t working was simply perfect. Of course the counter argument from the social media douche bags is that “Facebook is all about authentic relationships and transparent conversations between brands and customers.” Consider the source, given that the SMDB’s make their bones selling their Facebook Unique Customer Karma and Emerging Digital services (you can figure out the forced acronym) to breathless CMOs who want audience, damn it, and the bigger the better. And consider that the public relations/digital agency world is always first on any shiny object bandwagon (can you say SecondLife) and their current solemn obsession is reporting “Social ROI” as the rest of the faddish get obsessed with big data and analytics. (If you want to watch some fun navel gazing, play pissed-off CEO and ask a Digital PR person “How much is a Facebook Fan worth?”)
Companies, aka “brands,” obsess and fret about how many fans and likes they have; spend money on third-party tools like BuddyMedia to manage their presence, and set aside a slice of their digital advertising budget to buy good old display ads to run alongside the torrent of notifications and shared links that make up Facebook’s river of content. As I read elsewhere this morning, quoting Seth Godin (whom I never quote), “The Internet wasn’t invented for advertisers.”
Neither was Facebook.
Yet, in lieu of subscriptions or some twist on Warren Buffett’s theory of a toll booth on the only bridge over the river, where is Facebook’s money going to come from to sustain a valuation in the thin, thin air of $100+ billion ? If you know, then buy some stock. Me, I’m deactivating my Facebook account in honor of the TimeWarner-AOL/Prodigy/CompuServe/Groupon/Pets.com/WebVan of 2012.
Two weeks ago I began dinging every over-sharer on my timeline or wall or whatever the Zuckerborg called it this month. Goodbye pictures of glasses of beer, notifications that Ed was at LAX, weird R-rated bikini videos from people in Turkey and India I have never met and will never meet. Goodbye SocialCam. Goodbye Tweets. Goodbye to All That. Now …..
Goodbye Facebook and hello to less noise in my life.
Like Father like Daughter, I deactivated mine days ago.
“Like” 🙂
Excellent article, David. All this in less than 8 years for Zuck, he of 31 Hackathons. We are watching history repeat itself over & over again, this time in 11-12 years. Watch out below.
My inarticulate, but strong, feelings expressed perfectly. It’s a business. Where is the profit?
Great post. Gratifying to see the market has learned it’s lesson. In 1999, the price would be at $120 and rising on a company like this.
Amen brother — In my opinion, Facebook’s decline started when teens learned that “old people”, i.e., parents, were checking in.
Then there are those of us who NEVER had a Facebook page as I saw it was a sucker’s game right from the start. Zuckerberg is laughing his arse off at all the chumps who gave him Billions for selling them info others freely gave him.
I gotta believe that historians will look back at this era and ask if people were really as dumb as they seemed to be….looking at the present political and business markets, I would have to say that they will have surmised correctly.
For a $16 billion Global 100 company, I obviously agree that “Facebook …. Advertising …. Does….. Not ….. Work.” But the world is not made up of Global 100 companies. In fact I would guess that there are only about 100 of them.
My son asked me the other day while I was pumping gas, “Why would I want to follow Exxon on twitter?” I responded “You wouldn’t.” “Then why are they suggesting that I like them on facebook or follow them on twitter?” “Because highly-paid social media gurus tell them they must. I once knew a guy like that at Lenovo.”
But my son does follow Gungor. And he would click on a facebook ad from a local concert promoter that wanted him to know that Gungor is coming to town. And he does follow Cat’s Cradle. And he buys Groupons from local yogurt shops.
GM and the like look ridiculous on facebook and twitter and Groupon. Small businesses like Buck’s Landscaping (currently powerwashing my deck as I write this, courtesy of Groupon) do not.
As a real estate agent and an occasional small time music promoter, I love facebook advertising. For small business like me, and Gungor, and Cat’s Cradle, and Tutti Frutti, Facebook…. Advertising… is… essential.
Alas, David, these social media outlets were never meant for the likes of you and Forbes and Lenovo and McKinsey. If they can’t survive without you, they deserve to perish, and they will surely be replaced by somebody who can.
If Facebook can build its business off of small business/local advertising then all the power to them. That doesn’t fix their endemic issues around ad performance — apparently click-through rates is half that of typical display advertising networks — and their rapid decay rates. The macro issue for Facebook isn’t its overall value proposition to users: that’s pretty well understood and the driver behind its amazing population/census data. The issue is revenue models and whether or not the advertising opportunities presented by Facebook are compelling enough in terms of attributable returns to attract advertisers; and second, novel enough to withstand competition from Google and others.
I agree the very nature of a small, local business with an owner devoted to the daily give-and-take of a Facebook presence will yield better results over those of an impersonal Global 100 using a PR firm to manage its content operations and give-and-take with customers and fans.
At present I see no long term sustainable advantage for FB other than its installed base, inertia, and habit.
Facebook is a bottom feeder.
Wow, a massive installed base combined with inertia and habit sounds like an enviable advantage to me! Mix in a little anti-competitive behavior and you’ve got the heydays of IBM, Microsoft, and Major League Baseball. They should be able to monetize that.
Or they might completely blow it.
Yeah, massive base and inertia worked out dandy for AOL and MySpace too.
The emperor has no clothes. I’ve never clicked on any digital ad — Facebook, Gmail or mobile. In fact, I’ve managed my settings so I don’t see any FB ads at all. Now that Facebook has introduced a tool for page mangers to schedule posts in advance, the volume of promotional status updates will doubtless increase and it will be even less appealing to “like” a brand. Most of the pages I like are nonprofits or causes. I’ve lost interest in Twitter too.
http://www.smartplanet.com/blog/thinking-tech/q-a-the-scary-details-of-what-facebook-knows-about-you/11813?tag=nl.e660