If there weren't enough blogposts about Facebook, here's another. Facebook is testing a service that will place ads directly in the feeds of users, even those of products they or their friends haven't signalled a preference for, according to this story. Which means cat people might get ads about dog food. Yay.
Currently, ads are displayed on the right hand side of the page and are related to companies or products that particular users have liked. The company says they won't inundate users with ads. It's Facebook's third attempt at boosting mobile advertising.
The test comes as the company's stock has dropped continuously since its IPO over concerns about the company's future growth prospects. It makes me wonder what the user experience would have been like if Facebook (and its venture backers) hadn't agitated to go public. Without the pressure of having to demonstrate quarterly performance, the company might have had the ability to develop a more well-rounded advertising plan that perhaps would not piss off cat people.
(Not that I'm a cat person.)
5 comments:
Facebook's high multiple IPO price led the company to dark waters. As you mention in your post, the quick and dirty solution might create long term issues such as hurting the user experience. Mark Zuckerberg has contained his approach on long term value creation. i can only hope that as the sole leader of the firm he will stick to it. Facebook has the potential to be one of the greatest companies of the next 50 years since it has the trust of its users. Betraying its users in any way would cost the company to lose its most value assets: its users.
Facebook has struggled to handle the concept of shareholder value since their IPO. As their stock continues to plummet and there seems to be a steep climb back up to its initial offering price, Facebook has a responsibility to its shareholders to do all that it can to add value.
Although these new ads will be painful, at least they are trying to do something to generate more ad revenue and boost profits.
Is it the most appropriate way? Definitely not.
However, Facebook users have shown that, even though things are imposed upon them (such as the 'timeline' feature of profiles) - those who are immensely opposed to these functions will continue to use it, as Facebook serves a community that no other competitor has been able to rival.
The trick will be for Facebook to turn user loyalty/dedication into profits. As J.Weed mentions, cat people may be slightly annoyed at finding dog food ads in their feed - but they will continue to use it.
Facebook is having a uphill task monetizing mobile platform. More and more users are ditching theirs PCs to access FB... With limited real-estate on mobile, only viable ad mechanism is to throw in the ads right into the News Feeds..
See recent article I posted on this subject:
http://alittleclass.blogspot.com/2012/07/what-mobile-risk-facebook-says.html
I agree that Facebook has to drive revenue growth and meet Wall Street's unforgiving estimates (read short term). If done in a non-annoying and relevant way (say : cat food ads for cat lovers), I think this model will work and not piss-off majority of its users.. But the question is, will it help FB in a major way in generating returns is a $40 billion question...
as we've heard several times in class already, FB is having a very hard time realizing its inventory, and as some of you have already pointed out, FB is now under the gun to put revenue drivers ahead of service quality because its an under-performing public company.
The real question in my mind isn't how FB is going to maximize profits for shareholders but who is going to step up and seize the opportunity to be the next big thing in social media. If someone can create a site that makes it easy to port over FB accounts, perhaps even run alongside FB, and add some really cool wrinkles that optimize it for mobile while eliminating the negative components of the FB experience, then I think it's totally possible to unseat FB as the social media champ.
I am going to go against the consensus and say that Facebook is going to be very successful in its ad platform.
The data is showing that sponsored stories are having a higher ad yield than its regular display ads. Facebook has a lot of both structured and unstructured data on its users, in addition to unsolicited feedback (likes and fans).
Put aside the issues around the IPO and the share price - the company still has an enormous growth opportunity in the ad space.
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