People like to pick on the big guys: Yankees, Lakers, Justin Bieber, Kim Kardashian, LeBron James…and Facebook. We like to poke holes at these goliaths and claim their demise and death. We want to see them stuck in the mud and flailing. But then we like to see a good comeback and say we always knew they could do it like Apple and Tiger Woods. So I cringe as I saw two articles come out in the last 24 hours about how Facebook just isn’t all its cracked up to be: “Facebook Ads – Comments Don’t Sway Most Users” and “Facebook Will Disappear by 2020, Says Analyst”. In both instances they describe how difficult it will be for Facebook to survive because they have not figured out how to make money and sustain its stock price. That the social paradigm cannot keep its promises and will fade into the ether of other companies that could not sustain growth as technology changed – see Blockbuster, Sony and AOL. One article has already claimed that Facebook is the new Yahoo, a money-making company whose stock price is 1/10 of what it was when it peaked. That would forecast Facebook’s stock price to level off at approximately $3.80. Even Yahoo got into the bashing game with this retweet:
It’s always better to pick on then to be picked on. Even little kids on the playground know this. In the end, isn’t all this talk premature? Have the vultures filed up before the body has even collapsed? Facebook has over 900 million monthly users and over 500 million of those users are active everyday. It is making money at the moment with $1 Billion in net income on $3.7 Billion in revenue in 2011. The issue is, how do they create new streams of revenue as display ads are losing its luster and are not sustainable? This is an opportunity for brands and Facebook to work together and not only sustain its relevance, but come up with a plan that is not just innovative for its medium, but plays to the company’s strengths. Sponsored stories, Facebook credits, sponsored posts “Highlight,” an App Store and fixing their mobile ad strategy have all been considered moving forward. As Facebook starts driving brands to more sponsored/integrated content that is endorsed by users, it will be able to drive more revenue. The central key to Facebook is that is a huge depository for content to be shared. The better the content, the more it is shared. Brands need to find their “Facebook voice” and share content that people do not associate as a commercial or an ad but as shareable content. With the endorsement of a friend, that content takes on its own new life…but it is this type of thinking that will ensure that Facebook keeps going. Like the great book, “Good to Great” by Jim Collins, companies need to:
1. Be aware that there is an issue and work on it
2. Not be afraid to try off the wall things – they have the money to fail a few times
3. To understand that the product – Facebook – is not just a social hub (like Netflix was not just an online video store), but an aggregator and host of shareable/social content with high levels of engagement.
This content can be monetized as branded content or promoted content. With all the talk about ads being dead, people still share the good stuff. And if it is “sponsored” by actual people then it has an opportunity to be shared in a legitimate and organic way. Facebook should also consider using its most influential users as drivers of content sharing and providing a kick-back to those people. Similar to what YouTube does with its video “celebrities”. If the content is good people will not be as annoyed to see these things popping up on Facebook posts and the Fans can choose which brands/ads they are comfortable sharing.
Are these the final answers to Facebook’s problems… NO! But they are a peek into what could be considered as the company searches for what is next for them to steer their ship towards. In the end it is hard for me to root against the Yankees figuring it out and making it to another World Series, just like it is hard for me to claim that Facebook is dead.