Is Facebook Failing?
By. Kevin Priddle
Is Facebook failing? Despite joining the ranks of the business-elite in May – as the third largest IPO (initial public offering) in U.S. history with a $104 billion value – doesn’t it feel like the social media giant has been going through some growing pains lately?
In June, Facebook’s shares dropped from their original $38 value and dipped below the $30 mark. Around the same time, The Wallstreet Journal reported that the website’s user growth rate in the U.S. has slowed sharply and is the lowest since comScore began tracking the data in 2008. comScore also reported that Facebook’s user engagement on the site (the amount of time people spend using the site and engaging with other people’s profiles) is also slowing down.
To combat this slowing of user growth, Facebook announced it was looking into ways to (legitimately) allow users under 13 years old to sign up for the website. Under current American federal law users under 13 are prohibited from signing up for the website. But Facebook is currently testing out new platforms where preteens can sign up for a profile that is linked with their parents account (giving the parent the ability to accept/deny friend requests, and hiding posts by and information about preteens from anyone other than approved friends).
This seems like a desperate move to me, and there’s something intrinsically creepy about going after the pre-13 market. But maybe that’s just me?
Perhaps a symptom of now having to report to its stockholders, Facebook has also been struggling with its revenue model. As more and more users are logging onto social media through their mobile devices (iPhones, iPads, Androids, and Blackberries) Facebook needs to stay ahead of the curve in terms of it’s mobile advertising platforms.
So far they’ve actually been doing pretty good job…
A new study reported that “sponsored stories” (advertisements that show up in a user’s newsfeed opposed to a sidebar) have four times higher click-through rate and earn more money per impression than ads that appear on Facebook’s non-mobile version.
The problem is that Facebook is being sneaky about how it achieved this, you see often times users don’t even know they are clicking on an ad. This is because Facebook’s mobile platform slips advertisements into a user’s news feed and makes it appear as if the content was from a friend or fan page.
I’m not sure how I feel about this move by Facebook. It adds to the ever-growing pool of seedy decisions by Zuckerberg-led web giant (I’ll get to the others in a minute). I understand that they have to figure out a way to make ad revenues work on mobile devices, but I think there’s something wrong about tricking me into thinking a friend is posting content. It screws with one of the key reasons people use Facebook in the first place – we like to know what our friends are up to online.
But if I start clicking stories about my best friends, expecting to read something new and intriguing about them or what they’re interested in, but instead I’m greeted with an advertisement or corporately sponsored story… the website’s legitimacy is soon going to fade away.
Another shady move that sparked outrage among Faceback user’s was the website’s decision to switch the email addresses listed on users’ profiles with those provided by its @facebook.com system, as reported by the BBC.
Facebook announced plans back in April to start providing users with an @facebook.com email address. The idea itself isn’t so bad – users can access their emails and internal FB messages from the same place, and the addresses themselves could help drive more traffic (and thus more advertising revenue) to the website – but to arbitrarily remove my email contact information and replace it with an email address I don’t even use (or want to use for that matter) doesn’t sit well with me.
So is Facebook failing? I don’t think we’re quite there yet. The fact that the website’s U.S. user growth is slowing is not really cause for major alarm. It’s expected that a company that’s growing as fast and as large as Facebook is is going to go through both ‘hot’ and ‘cool’ periods. The change can also be attributed to the fact that Facebook has already snagged about 71% of all 221 million internet users in the U.S. – over 156 million people – meaning the website is simply running out new people that can sign up for the website.
So no, I don’t think we’re going to see any major ‘fall of Facebook’ in the near future. Facebook will figure out the advertising model, they continue user growth in other parts of the world, and their stock value will level out at a healthy price. I think most people are too reliant on Facebook to start jumping ship.
That said, if Zuckerberg continues with the shady, secret, behind-your-back moves like switching email contacts and going after pre-teens then users will eventually get fed up and move on to the next big social network (which hasn’t even been invented yet).