The recent FacebookIPO has dominated not only the financial media, but people who have never in their life purchased a share of stock or actually know what an IPO is were discussing around the water cooler the pros and cons of investing in this iconic social media company. For sure, a company that was launched in a college dorm room about 8 years ago being valued in the billions of dollars is news. For many, a vision of making a lot of money on this investment is irresistible. After all, didn’t Apple stock once sell for about $4 per share? Last look showed it trading in the $500+ range.
It seems to me that while Facebook has quickly become a staple of daily life for millions of people around the world, its value to advertisers, the real driving force behind its recent stock valuation, could quickly wane.
In my experience there are three types of Facebook users. People in the first group have a Facebook account and most likely used it a few times when they first signed up. After the first few days they forgot about it and perhaps now visit infrequently… if they can remember their password. These accounts are in the minority but still inflate the reported extraordinary number of subscribers. And since they seldom sign on, members of this group seldom see the advertisements.
On the other side of the spectrum are the Facebook fanatics. These are the folks that feel the need to let all their digital family know that they just enjoyed eating a Big Mac or that they are at the super market buying some grapes. In many ways they live on and through Facebook. These are also the people that you really want to “unfriend” but you don’t want to hurt their feelings. Since they live on Facebook one would presume that they see some of the ads.
The third group, and in my opinion the largest, is made up of people who look at the site once or twice a day to catch up with friends and family. They review a picture of the grandkids or a vacation spot, read a rant or two about a politician or see an invitation to support a cause. Facebook is just one, albeit convenient, way of staying in touch.
I consider myself a member of the latter segment of users and therein is the issue. I don’t pay attention to the ads. I know they are there but I am certain they have not influenced me to buy or think or call or do anything. I don’t think I am alone.
So if Facebook is to live up to its multi billion dollar value based on effective advertising, we may have a problem. I would hate to see Facebook adopt the “in your face pop up” strategy that the Enquirer uses on line. Unfortunately that may be the only option.
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