Facebook has a rare opportunity to breakout as the next Fortune 500 Internet superpower. As much as I personally am addicted to Facebook, I don’t see it making the transition from fad to a viable large corporation. One simple stumbling block stops Facebook: it has not cultivated consumer trust as a brand. It has demonstrated a certain odd tone-deafness to understanding its audience, easily fooled by some very impressive statistics. The consumer perception is one of a Facebook that’s itching to exploit its massive user base in a feeding frenzy for advertisers. I remember Steve Case trying to change the Wall St. perception of AOL by recasting user numbers as a “surrogate measurement of the company’s value.” Facebook is in a similar situation of being lost in statistics and could suffer a similar rapid decline users as AOL.
One of Facebook’s true beauties is its exquisite simplicity. By creating a simple web-gathering place for “user presences”, Facebook has created a holy grail of “universal messaging” or “personal directory services.” This is an accomplishment that has eluded entrepreneurs and major media brands for over a decade — it’s insanely valuable. Facebook could transform its business into a powerful directory services utility – the digital phone book for the 21st century.
To not be a blip in the history of techno-fads, it needs a clever approach to get beyond being primarily ad supported. It must engage a far higher level of consumer trust. Advertising may make Facebook profitable today, but ads create no loyalty, and create a sort of a digital ghetto where parasites leap from every dark alley to steal your identity.
“Personally identifiable information” is a currency, serious equity, on the web. Unfortunately for Facebook, much of its appeal is that all its services and benefits are totally free. There is no reason for users to pay for anything, and no incentive to expose any financial information. Stranger than fiction there is not a means to pay for anything. Users don’t even have an incentive to be who they actually say they are. Personally, I never give out my birthday for what I see as a free entertainment service, and never will — I am not what Facebook says about me. While Facebook can get a lot of mileage with targeted advertising with freebee-self-characterization and user activity; it’s still doesn’t translate to user trust in a Facebook brand.
In fairness, Facebook is doing pretty well with revenue, advertising is working. No one is asking how they’re going to survive; somehow it’s going to work out. I’m simply asking Facebook step up to be what they could be — because I am a big fan.
Facebook has a massive appeal that crosses every demographic of Internet user. While Facebook may have magically captured marketshare and mindshare in a way never before imagined, its only appreciable revenue model is advertising. The opportunity for the company is much bigger than an ad-supported business. In my next post, I will discuss what I see as a bigger problem, Facebook’s ultimate opportunity, and something near and dear to me: its developer program.
Note: Immediately after this post, Facebook radically changed many of the policies and user interface issues I was about to address. I still have all that commentary and analysis in the can, but since Facebook is still dynamically changing, pretty much on the fly, I am going to hold off publishing it, at least until they’ve finished making changes on the fly. Fortunately, for me, my assumptions and analysis still holds.
Facebook has no customer service and if your account is screwed up or you need help…tough. Start over. (Sound familiar? In the early days, we called it bicycling.) Perhaps they feel like it’s ok to lose a thousand or two customers, because prior to custom names – we were all numbers anyway….but eventually, at some point…every person on facebook will have an issue – that will go unresolved and they will migrate to an environment where they at least perceive someone cares about their presence, user experience and privacy.
Oh, and of the multi gazillions of users they claim to have…I wonder how many are abandoned because they were hacked or had an issue no one resolved? I am thinking really, they probably only have 60m people online – but at least 70% of those people have multiple accounts. LOL!
I dunno…I just hate the skewed internet business model of building something, gaining millions of users – which somehow translates into millions of dollars of investments, which are burned through at lightening speed, an unbelievable imaginary valuation, and then the business realizes that they need to actually make money, so the users suffer with being bombarded by crappy ads and get served a hot dish of bad user experience.
That raises some great points, Judy. I would love to get a handle on the real numbers of active users v. redundant accounts. My cat had an account for a while, but I did take it down. He had a lot of friends quickly … he looks a lot like Brad Pitt