Facebook: How they just sold you out again



Contributing Writer
Photo: May 8 2003 Credit: Amanda Hartman


Facebook just rolled out another new and intrusive advertising initiative.  Not surprisingly, this one seems a little more insidious than the rest.

Mashable reports that Facebook is selling advertising in user’s newsfeeds without user affiliation to the brand (i.e. users or their friends haven’t Liked the brand page).  While Facebook asserts that this is simply a “test,” it appears that everyone except for Facebook’s public relations department understands that this is the new normal.

So what is the big deal?

The big deal with an initiative like this is that it seems to be an overt betrayal of Facebook’s (implied) agreement with its users.  The decline of Facebook’s stock yesterday (the end of its first “lockup period”) showed that Facebook may be a house of cards.  Their desperation to right its ship may be warranted, and this appears to be an indication that they feel a sense of urgency to make nice with investors.

Consider this statement from Mark Zuckerberg to potential investors back in February:

“Simply put: we don’t build services to make money; we make money to build better services.  And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.”

How empty do those platitudes seem now?  The Facebook advertising model has become analogous to television advertising.  It will be interesting to see users react to this, and how effective it is compared with Google AdWords – now a competing product.

So what’s next for Facebook Advertising?

It’s hard to imagine what Facebook could do increase advertising at the expense of user experience any more.  If they were truly desperate they could try:

- Product placement in personal photos, such as the additional of a soda in a baby picture or fast food wrappers at a wedding reception
- Allowing brands to hijack user accounts, sending whatever they want from whoever they want
- Mandatory GPS chip implantation allowing geo-specific ads to be shown through the optional Facebook ocular implant
- Mandatory Facebook ocular implant.

The point is that there really isn’t a clear lower ground for Facebook to take.  With nearly two billion shares of Facebook’s stock set to release in the next nine months, the stock in decline, and an advertising strategy that ignores user experience completely, something’s got to give.

That “something” right now is user experience.

 

Photo Credit

 

 

Jim Dougherty

Jim Dougherty

Writer and chief of miscellany at leaderswest.com

I aspire to give people something to think about rather than tell them what to do. My favorite Google Alert is “social media research,” I am increasingly compelled by Gen Z, and I appreciate good writers agnostic of where they write. At one time I was Kred’s 12th most influential social media blogger and Klout’s most influential person on the topic of David Hasselhoff. Transplant from Seattle living in Cincinnati. Haven’t entirely adopted the local sports teams yet.

Jim Dougherty

@jimdougherty

Writer about social media and tech at Leaders West, I also tweet as @leaderswest.

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Jim Dougherty

Jim Dougherty

  • Ross Quintana

    Yes if Facebook didn’t make such dumb choices they could be rich and successful. They continue to waste the great opportunities they have to do it smart.

  • http://twitter.com/eduleadership Justin Baeder

    I can’t say I’m offended at this type of ad, but it’s definitely a departure from FB’s MO and probably a sign of desperation. I can’t imagine that it’s going to result in better results for advertisers than AdWords.

  • http://www.proservicesks.com Frank Woodman Jr

    I couldn’t agree more with your assessment.

    FaceBook right now is reeling like a punch drunk fighter trying to stay on his feet. And as they flay away at every wild and crazy idea for advertising revenue they continue to disregard their users.
    They should stop to remember AOL, MYSPACE, DIGG, MOTOROLA, RIM, and so many many more before them that have tried to run roughshod over their users and failed. Given time if FaceBook doesn’t change it’s ways it will join this less than stellar group.

    Worse still is that they will succeed in destroying more investors money than the recent recession if their stock keeps falling. And it looks more and more grim as profits haven’t changed much while an additional 2 billion shares will soon start hitting the market.

    At this rate FaceBook’s stock plunge is starting to make RIM look like a good investment..and remember most people who use their Blackberries still like them. I’m not sure the same can be said about FaceBook

  • http://www.WhatDidEricSay.com Eric Miltsch

    What do you suppose facebook is intending to do with all of the user data they are acculating? The sole intention has always been to create a better targeting network?

    There is no implied agreement between facebook and it’s users. As a public company their responsibility is to the shareholders now. If this creates shareholder value then they have succeeded; users can always cancel their free service.

    Besides, with nearly 500mm mobile users now, their revenue opportunity comes delivering a new mobile ad unit.

  • jimdougherty

    Just read your post nodding my head in agreement, Justin. Great insight – thanks for reading and commenting!

  • jimdougherty

    I’m going to resist the temptation to give a shout out to Gonzaga, Ross…. even though I know you are in my college hometown! Great insight. Hindsight being what it is, I suspect Facebook would have been more deliberate and transparent about their monetization efforts. That said, it’s not going to be until that last lockup period ends in May 2013 that the price of their stock is going to be stable. A sad state for them right now.

  • jimdougherty

    Fantastic thought Eric. When you start to think about how they exploit their assets further – personal information is something that they have a lot of. In a previous post I proposed that they might consider releasing access of some info to employers with the LinkedIn-type product. We’ll see. I suspect it will continue to be an interesting year or so for Facebook. BTW – I don’t know if you saw but their mobile product is delivering great results, much better than the web product. Cheers!

  • jimdougherty

    Thanks for reading and commenting, Frank. I’ve been trying to wrap my mind around the question of what happens to Facebook and the punch drunk fighter analogy seems apt. Their lockout agreement (from what I understand) is quite novel, but one would think that the volatility would decrease after the last lockup period ends in May 2013. But if their stock price falls further, one wonders how much more money they’ll be able to raise and how that might handcuff them down the line. I agree with you that it’s not a good situation and has potential to be dubious, particularly with popular sentiment aligned with their stock price.

  • http://www.WhatDidEricSay.com Eric Miltsch

    Jim – facebook’s opportunity is leveraging this data for mobile advertising networks. As these mobile user continue to access facebook via wi-fi, advertisers need the ability to taget consumers – wireless carries don’t have the ability to provide targeted consumer information over wi-fi – blind networks are the wireless carrier’s worst nightmare, are facebook has the ability to provide this solution. That’s why everyone is so amped up for facebook to launch their own branded phone. Facebook can, in a matter of speaking, become the carrier and the data source. In my opinion, this house of cards is a lot stronger than most give it credit.

  • http://www.proservicesks.com Frank Woodman Jr

    Sadly how this will play out we will only know over time. But lets hope that public sentiment doesn’t turn so bad that it does hurt FaceBooks performance going forward. For no matter what you think of FaceBook you hate to see see them fail hurting everyone that’s invested as well as all the people at FaceBook that have worked so hard to make things successful.

  • jimdougherty

    Thanks Eric! I always say that the luxury of being a pundit is I get to dissect anything I want after the fact. Probably a lot of merit to your point about mobile, especially with Facebook tracking their entire “ecosystem” instead of just their own app. I think that Facebook-specific hardware won’t be a big draw for consumers, but they have made strides in mobile advertising and I’m sure that this newest initiative will prove successful for them in mobile as well! Cheers and thank you again for your insight!

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