Editor of
Features Editor at Death & Taxes Magazine, contributor to The Week, Interview, and Vice Magazine.
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Facebook: The Party is Over
Mark: You want to end the party at eleven.
Eduardo: I’m trying to pay for the party.
Mark: There won’t be a party unless it’s cool.
THE SOCIAL NETWORK
It’s eleven o’clock and a ton of people just found out Facebook’s party is over.
Facebook had a pretty terrible day yesterday press-wise. In the morning, an AP/CNBC poll discovered nearly half of Americans think the social network is a passing fad. A few hours later, Wall Street Journal reported that General Motors planned to pull its advertising. At nearly the same time, serendipity served up a third-party infographic (published by WSJ) showing click through rates to be far below average on Facebook’s display ads. These three stories are doing a ton of damage to Facebook’s image by attacking two core parts of its narrative that are usually untouched: the party and how Facebook pays for the party.
Now, Facebook has by no means had a free pass in the past when it comes to coverage. Privacy concerns have bloodied the company’s reputation repeatedly, and tech blogs give the network its fair share of grief. Rarely though do you see three stories on the same day from mainstream news outlets attacking two of its sacred cows: revenue potential and “coolness.”
First, the narrative of how Facebook pays for the party has just taken a sizable hit. With a major advertiser like GM literally saying that paid ads have “little effect on consumers,” it becomes much more difficult to sell social (as opposed to Google’s approach) as the optimal way to target ads. Adding insult to injury, the WSJ published this infographic that showed Facebook’s click through rate on display ads to not only be just 1/8th Google’s, but also below the average for US banner ads as a whole. While paid ads are only part of Facebook’s overall experience, they are a gigantic part of its business. If more anecdotes and data appear knocking the effect of paid ads, it won’t be long before advertisers start shrinking their still fledgling budgets devoted to Facebook.
Second, the party itself just isn’t cool anymore. Of the three articles the most damaging is CNBC’s and AP’s finding that nearly half of Americans feel Facebook is just a passing fad. Since its inception, Facebook has traded in an invaluable currency - it was undeniably cool. Ordinary consumers loved the company because it was radically transforming how they connected with friends, and investors fell over themselves trying to get a piece of its unprecedented growth. That narrative has rightly held up for quite some time, but it’s coming to an end. When Facebook announced the Instagram acquisition, many feared that Facebook (supposedly a company with its finger on the zeitgeist) would wreck the newer and “cooler” Instagram. This 12 year old summed it up best when she said, “Facebook is stupid and for old people.”
Facebook’s party just isn’t cool anymore, and the ads that pay for it don’t really work that well. The party’s over, and it’s no fun when all your friends figure that out right before your
birthdayIPO.
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zaiger reblogged this from rossneumann and added:
yesterday… We got $50...free advertising credit...and didn’t...
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Further proof that nothing on the internet lasts. Facebook won’t, Tumblr won’t. They’ll eventually go off into internet...
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But with gowalla, instagram and that other company they bought last week(Glancee) and now, Lightbox it seems like they...
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I can’t imagine Facebook going anywhere anytime soon, but I sure as hell wouldn’t invest a dime into it. It will Slowly...
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yesterday… Agree. Agree. Agree.
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