Facebook Makes its Own Advertising Problems

RSS Feed

Facebook Makes its Own Advertising Problems

May 29th, 2012

FAKE NEWS for the Zionist agenda

Facebook‘s stock is continuing to fall in its second week on the market, now trading around the $30 mark, and all because of the social network‘s own stubbornness. Throughout its whole IPO ordeal, Facebook’s IPO has so far continued its droopy trajectory because the market doesn’t trust its advertising model. And, for good reason, Facebook hasn’t proven it can capitalize on mobile, they say. Its ad revenue model isn’t sustainable, say others. But an Ad Age article, which details how the General Motors-Facebook ad deal fell through, shows how some of its ad problems are of its own making.

Just as Facebook was about to IPO, GM announced it would pull its $10 million ad campaign. In the scheme of Facebook’s multi-billion dollar ad business, the move only hurt the company symbolically. With the timing of Facebook’s public debut, that happened to hurt a lot since Facebook needed to show it had a strong ad model. But it turns out that rather than GM losing faith in Facebook’s platform, it was Facebook that quashed the auto giant’s interest in a campaign. Facebook nixed GM’s request to use a Facebook Page as advertising. “GM asked if it could take over a page. It was told no,” writes Ad Age‘s Cotton Delo. Selling pages to advertising is an obvious way Facebook could make money, especially from big advertisers willing to pay that premium. Yet, Facebook has relented, claiming it would alienate its audience. “We have 900+ million people on the platform and our job is to make the advertising on the platform as good and as compelling as content from [users’] parents or their friends or their boyfriends or girlfriends,” Facebook’s VP-Global Marketing Solutions Carolyn Everson told Delo. “So when a marketer asks for something like that, that’s just not what works on Facebook, so we would say no.”

Like all social networks, Facebook sees its users as its value and anything that compromises those users also compromises its value. But, increasingly, that’s not enough. And not just for Facebook. All those hot social media companies have started trying to turn popularity into money, as a recent New York Post article details. “Guess what? Revenue matters,” Lawrence Lenihan, an investor in Pinterest told the Post‘s Garrett Sloan. “Revenue used to matter. Revenue will always matter.” Pinterest does not yet allow advertisers on its site, but has had more success than Facebook because of its natural link to retail. Even without a sanctioned ad model, the social network has hosted pseudo-ad campaigns, like this Women’s Health contest, which asks Pinners to create Pinboards incorporating images from the advertiser Forever Diamonds. The winner will receive a trip to the Hamptons this summer.

Companies can do that sort of thing on Facebook, too. But advertisers want more. They want to pay Facebook for bigger spots, that give them an edge among competitors. As Everson explains, Facebook doesn’t think that “works” so it will continue to say no. The problem is, Facebook doesn’t give an alternative. And, as Facebook acts as a barometer for the rest of the social media world, things aren’t looking too good all around. It’s not just Facebook’s stock that has faltered, as a YCharts post on Forbes points out. Yelp, Groupon, Angie’s List and Zynga have all seen steady declines since going public and especially since Facebook’s failed public debut. Maybe this means it’s time to buy into these companies, posits Dee Gill, writing for Forbes. Or, maybe we’re just seeing another tech bubble go pop. “The original dot com bust should have taught us that investing in hype and revenue growth that’s not paired with a steadily improving earnings stream is quite risky, especially when there are outsized valuations on the shares,” writes Gill. Facebook could fix this imbalance, giving in to advertiser requests like GM’s. But, as Mark Zuckerberg said at NASDAQ two Fridays ago, it’s not in the business of making money. So, it likely won’t.