Undoubtedly, the biggest media story this week is the Facebook IPO, which was filed today. As I write this, Facebook’s current value is $104 billion. Not bad for an eight year old company that’s run by a 28 year old college dropout with terrible fashion sense.
On the surface, Facebook’s future looks bright. But like any other meteoric rise to super stardom, there’s always a contingent of haters who relish a figure’s fall from grace. Or in this case, pessimistically predicting what and when will be Facebook’s ultimate demise. Let’s take a look:
An AP/CNBC poll done earlier this month found that there was a fairly even split between those who think Facebook will fade away as other new social networks emerge and those who believe it will stay successful for the long haul (46% and 43% respectively). The largest complaint among respondents had to do with privacy concerns. Only 13% “completely trust the company to keep their personal information private” while 59% have little/no trust when it comes to Facebook keeping their proverbial lips shut.
Further, when it comes to F-commerce, only 8% said they would feel safe actually making a purchase on the site. Even among Facebookers who are on the site several times a day, half would not be comfortable making a purchase on the site. This will be troublesome for marketers who have sacrificed other online channels, particularly their own website, in favor of just a Facebook page.
Second, Facebook is a monopoly, or so says Steven Johnson in Wired. As it strives to become “a medium unto itself” sharing a link to another site is growing increasing difficult. The new seamless sharing functions basically to keep us on Facebook. Say your friend likes/comments on an article she read on HuffPo. You click on the story expecting to be taken to that site. Nope. You’ll get a popup urging you to install the HuffPo Facebook app, which then shares all the stories you read on that site, NSFW and otherwise… If we don’t like it, tough. We have no other options except to delete our accounts – this is where it becomes monopolistic. As D.E. Wittkower wrote in the WSJ “the monopolistic, public-utility-like aspect of Facebook’s business model of trading on network effects [the more people who use it, the better the site becomes] ought to make users concerns that they may be exploited or abused.”
And let’s talk advertising on the site, paid advertising that is. As more and more users log on from mobile devices that don’t show paid ads, marketers are going to be even more reticent to invest in anything beyond their brand pages. And new/more/better ads are the bulk of Facebook’s Strategy for raising revenue. In fact, General Motors – the third largest advertiser in 2011 in terms of dollars spent – announced earlier in the week that it will cease purchasing ads on Facebook mid-year. Will GM prove to be the first of many defecting Facebook advertisers? Probably. Especially given that there’s not a measurement for how effective the channel is (Does anybody pay attention to the ads on Facebook?), and dollars can be invested elsewhere without abandoning the site completely.
So, what will happen to Facebook? No one can say with certainty. Regardless, we’ll all be watching, captivated. Just like every other rags to riches story.




















