Following months of anticipation, Friday turned out to be quite the anticlimactic day for those of us watching Facebook’s debut at Nasdaq. “Slow day in news” tweeted Jack Dorsey, Executive Chairman of Twitter and CEO of mobile payment platform Square. Ain’t that the truth.
At the end of the day on Friday, Facebook shares closed a measly 23 cents above the IPO price. In disappointment (or in some cases, delight) many wondered what prevented the anticipated pop.
The obvious answer: Where’s the money at?
Facebook must implement new advertising strategies in order to convince investors, and ultimately marketers, to spend more money with them. But that’s easier said than done. Facebook users are notoriously touchy when it comes to changes in the platform, so the question becomes, will they really stand for more ads in more places?
And the hoodie-clad founder sees this point. In his 2500 word letter to shareholders, Zuckerberg wrote:
Facebook was not originally created to be a company. It was built to accomplish a social mission – to make the world more open and connected … Simply put: we don’t build services to make money; we make money to build better services.
That’s nice and all, but it points directly to the conundrum at hand: how are they going to simultaneously make money and keep users happy? From the user perspective, as Facebook serves more ads, the quality of the network goes down, and users grow increasingly restless. And that’s when Google+ starts to look better and better.
The not-so obvious answer: Consumers have more than one need
But even if Facebook had a stellar monetization plan for the future, it’s still important to note that Facebook is but one piece of the puzzle. Social media is not the end all be all of digital marketing, and we can’t pretend that it is, whether we’re making stock purchasing decisions or building digital strategy.
Industry experience and hard data tell us that other social platforms, paid search, email, mobile, content and external analytics are all more effective than Facebook when it comes to connecting with consumers.
Facebook vs. other social networks
A 2012 study from ExactTarget shows that Twitter is more effective than Facebook when it comes to driving actual sales. Meanwhile, Hubspot tells us that LinkedIn is 77% more effective for lead generation than Facebook.
Facebook vs. paid search
Facebook’s advertising growth is strong, but it hasn’t kept up with the enormous growth of its user base. Facebook ads have low CTRs; according to WordStream the average is less than .05%, which is half the industry average for banner ads. Facebook also lacks retargeting capabilities – a powerful tool in digital paid media.
With Facebook ads, brands have two formatting options: either text plus image or Sponsored Stories. Meanwhile Google Display Network offers text ads, image ads, flash-based ads, in-video ads, mobile ads and mobile game ads.
Facebook vs. email
In a 2012 study, ExactTarget shows that email is more effective in driving sales than Facebook, and by no small margin. Forty six percent of online consumers have purchased a product after receiving an email marketing message, versus on 24% on Facebook.
Facebook vs. mobile
Here’s a big one: Facebook doesn’t offer mobile advertising. And while Zuckerberg promised investors that mobile is a top priority for the network in 2012, talk is talk. Besides, bigger pictures don’t exactly make money.
Facebook vs. content
According to a benchmark study by Content Marketing Institute, only 50% of B2B marketers believe that social media is an effective tactic. Meanwhile, significantly higher percentages of B2B marketers believe that content marketing strategies are effective. Specifically:
58% believe blogging is effective
60% believe white papers effective
61% believe videos are effective
70% believe case studies are effective
70% believe webinars are effective
Facebook vs. analytics:
While Facebook Insights has improved over the past couple months, the information available is still rather limited. Likes, Reach and Talking About This are important statistics, but other analytics platforms, like Google Analytics for example, have the power tell us who visitors are, where they come from, how long they stay and a whole lot more.
If Facebook wants to prove its worth to marketers and investors alike, it’s going to have to align itself with consumer needs and – surprise surprise – those needs expand beyond the classic social platform.
