7 Reasons Why Facebook IPO Was A Bust

Harry · May 21, 2012

5. Facebook boredom, particularly among professionals. The company says it is zeroing in on a billion members. Good for Facebook, but what I would like to know is how many Facebook users have grown bored. I have not visited my Facebook page in two months. Almost every professional person I talk to who is over 25 years old has grown bored with Facebook.

6. Facebook is not necessary. Investing in tech companies is never easy. The great Warren Buffett eschews it. The key question about tech companies is not P/E values, but necessity. I like Google, Intel, Cisco, IBM, Oracle, EMC and SAP because the world’s economy depends on them. Sure, we could live without them, but not without major disruption. The switching costs would be extremely high. (I like Apple for an altogether different reason — the 80-20 rule; 20% of customers in any field will pay top dollar for a great product. Apple may be more of a luxury than it is integral to the global economy, but Apple monopolizes the luxury category.) Facebook is not integral to the global economy and its cool brand is rapidly fading.

7. Mass social media is a crock. It is an inherent contradiction. This is why I like LinkedIn more than Facebook. It has a special purpose and therefore doesn’t feel like a time waster. FWIW, I predict the next huge win in social media will be in health care. As a health care consumer, I want chat with people who are just like me. With similar gene structures. Who suffer from similar maladies as well as the genetic potential for similar maladies. When linking up with my “health friends” I also want a 100% guarantee that my social network won’t betray my health confidences. Would I trust Facebook to keep these confidences? Never.

read more: http://www.forbes.com/sites/richkarlgaard/2012/05/21/7-reasons-why-facebook-ipo-was-a-bust/

meangreendork · May 21, 2012

I think the IPO was too late and the initial fun of the open-to-non-college stage of Facebook is over. It's very much just a matter-of-fact part of life now, and sort of a luxury/low-priority thing at that.

I do think that part of the writer's statement - especially #7 - is based on age. I do think that the idea that social media is the end-all-be-all of media is nonsense and I've always felt that way. Social media is only as good as the strategy and product behind it. GM pulling their money away from Facebook ads amuses me because that money should've never been there, or not as much as it was. You can use Facebook as an awareness tool, but don't expect to see 20-25 year olds buying GM cars especially when GM still has a less-than-ideal reputation, and don't expect them to buy a car just on a stupid Facebook ad.

Social media is hitting the same point in its lifespan where simply just having a social media presence means nothing. It's where television, direct mail, print ads and the rest already have been. Be short, social media is beyond the point where you can spam people with it and expect a response.

All About UNT · May 21, 2012

I think the IPO was too late and the initial fun of the open-to-non-college stage of Facebook is over. It's very much just a matter-of-fact part of life now, and sort of a luxury/low-priority thing at that.

I do think that part of the writer's statement - especially #7 - is based on age. I do think that the idea that social media is the end-all-be-all of media is nonsense and I've always felt that way. Social media is only as good as the strategy and product behind it. GM pulling their money away from Facebook ads amuses me because that money should've never been there, or not as much as it was. You can use Facebook as an awareness tool, but don't expect to see 20-25 year olds buying GM cars especially when GM still has a less-than-ideal reputation, and don't expect them to buy a car just on a stupid Facebook ad.

Social media is hitting the same point in its lifespan where simply just having a social media presence means nothing. It's where television, direct mail, print ads and the rest already have been. Be short, social media is beyond the point where you can spam people with it and expect a response.

Well said. I know some people that work at a Social Media Agency in Addison......they thumb their noses at other types of internet presence while their average client's Facebook page has a mere 60 likes.....woowee.....well worth the 2k a month these clients shell out every month for a generic moderation of Facebook and Twitter updates.

UNT90 · May 22, 2012

Social media will go the way of pagers. Once cool and a status symbol, pagers are now only used by a select few professions. Yes, cell phones put them out of commission, but something will come along and do the same thing to Facebook.

The under 25 demographic is one ADD, ADHD filled bunch. Even they will eventually lose interest.

Green P1 · May 22, 2012

Social media will go the way of pagers. Once cool and a status symbol, pagers are now only used by a select few professions. Yes, cell phones put them out of commission, but something will come along and do the same thing to Facebook.

The under 25 demographic is one ADD, ADHD filled bunch. Even they will eventually lose interest.

you're right about Facebook eventually dying, but you're crazy if you think "social media" is going the way of the buffalo.

meangreendork · May 22, 2012

Social media will go the way of pagers. Once cool and a status symbol, pagers are now only used by a select few professions. Yes, cell phones put them out of commission, but something will come along and do the same thing to Facebook.

The under 25 demographic is one ADD, ADHD filled bunch. Even they will eventually lose interest.

Social media isn't going anywhere, but its application will change. It's like I mentioned above - between 2002 and 2010, you could more or less do what was done with television advertising in the 1940s/1950s and oversaturate the consumer market with whatever you wanted and you might see some results because the medium being used is so new. And just like television ads after that period (and actually, starting in the 1950s), social media is at the point where companies now have to specifically target their audiences and have reasonable expectations of their efforts.

For some, social media is best used as an awareness builder. For another select grouping, you can get a market to take actions by way of social media to make things happen. But for someone like GM to expect that Facebook ads would lead to direct sales is uneducated and poorly advised.

meangreendork · May 22, 2012

Well said. I know some people that work at a Social Media Agency in Addison......they thumb their noses at other types of internet presence while their average client's Facebook page has a mere 60 likes.....woowee.....well worth the 2k a month these clients shell out every month for a generic moderation of Facebook and Twitter updates.

Oh, UNT's social media presence is working pretty well. It's at 56k+ "likes" (used to be page group members). That's not bad for the FB page having been up for only about 2 years.

Harry · May 22, 2012

Oh, UNT's social media presence is working pretty well. It's at 56k+ "likes" (used to be page group members). That's not bad for the FB page having been up for only about 2 years.

But what exactly do "likes" equate too? I know Facebook would say it means you are actively following that page. The other side of the fence say it was one pass through.

The Fake Lonnie Finch · May 22, 2012

It's not that social media will go away. It will continue to evolve. AOL yesterday, google currently, next...the Moon!

The thing is, two things:

(1) Someone professional will build a better mousetrap, i.e., one without all of the privacy hangups of facebook, the seeming aloofness of the CEO, etc. Personally, I'm not excited about giving heaps and gobs of money to a kid who shows up at professional meetings in a hoodie. Consequently, I feel the same way when I go to meet a potential customer and they are in shorts, flip-flops, and a t-shirt. Very, very few successful people are slobs.

(2) Internet advertising as your source of revenue is dicey. I'm not saying it's all bad. But, it's certainly hit and miss. And, can anyone really pinpoint a target audience among facebook's users? Yeah, yeah, yeah, I know...you go in and target it yourself. But really, people aren't going onto facebook to buy anything, so the advertising intake is not going to grow much beyond what is already there in it's current format.

Green Mean · May 22, 2012

I've heard recently that once Google+ gets some serious clout that they'll clearly overtake Facebook. Plus I read an article a while back that Google+ wants to make their thing like a LinkedIn as well and that it will be common for people looking for jobs and companies will resort to Google+ over LinkedIn eventually. Who knows.

yyz28 · May 22, 2012

I don't see the IPO as a bust. It came out at a number that the market apparently feels is a rather fair valuation of the company. Virtually every tech IPO which skyrocketed day one is now bust.

...had it tanked the first day, that would be a bust. The fact that it didn't rocket to the moon doesn't make it a bust. Those of us who believe in the tried and true buy and hold market strategy are perfectly happy with Facebook's performance in the market.

Censored by Laurie · May 22, 2012

I've heard recently that once Google+ gets some serious clout that they'll clearly overtake Facebook.

Did you read that on Google?

meangreendork · May 22, 2012

But what exactly do "likes" equate too? I know Facebook would say it means you are actively following that page. The other side of the fence say it was one pass through.

Positive awareness, basically. It's important to keep things as close to the front of someone's thinking as possible. That whole "household name" thing and all. Even more so when it's something good like LEED certs or UNT going CUSA.

Green Mean · May 22, 2012

Did you read that on Google?

Hah no it was probably on Yahoo or MSN where I read most of that sort of stuff. Frankly for me personally I don't care for Google+ or Facebook. I have a FB account but rarely use it and login to see what is going on in other people's lives. My only use for the dang thing is whatever cool bands I like, I'll "Like" them on FB so that I can follow them if they make a new song/album or tour etc. Other than that FB is completely useless and a waste of time for me.

The Fake Lonnie Finch · May 22, 2012

I don't even know or care what LEEDs is. As far as I'm concerned, it's a city in England or something. But, most of the time I "like" something on facebook, it's because a "friend" has asked me to on their behalf, i.e., their business. So...really, how much cache can you put into "likes"?

That's the thing that will vex and keep big investers away...you can't really quantify well what is happening within facebook from an advertising standpoint.

meangreendork · May 22, 2012

I don't even know or care what LEEDs is. As far as I'm concerned, it's a city in England or something. But, most of the time I "like" something on facebook, it's because a "friend" has asked me to on their behalf, i.e., their business. So...really, how much cache can you put into "likes"?

That's the thing that will vex and keep big investers away...you can't really quantify well what is happening within facebook from an advertising standpoint.

That would be where getting the user to take an action kicks in. That's also the point where the message/effort has to be really specific. If I'm running a bar/restaurant in Denton and I'm saying, "mention the Facebook ad" when you come in for a dinner and you'll get a round of drinks, that's fine and that would work. Or liking the page means you'll be first in line for beta testing of a game - that's an idea too.

But when you're (again, GM) the same thing doesn't quite apply. So for investors, FB is sort of an oddity since it's only really useful when used very well. Would I buy into Facebook? Yeah, but I wouldn't put much into it - its value is really more in how its commercial-level clients handle things and if Facebook decides to offer consulting to its larger commercial users so help ensure their success.

Monkeypox · May 22, 2012

Facebook at IPO wasn't a great idea because they've simply not put any resources into monetizing their traffic to this point. There IS money to be made, but as meangreendork mentioned, it will have to be in more effectively targeted marketing. Drive by ads have a ridiculously low click rate on facebook. Nobody's there looking for crap to buy online. Now, once it can effectively start delivering local incentive-type ads to people, like Groupon, for an extremely lazy example, then it will have an actual business model. Until then, it's just a money sink for investors to be in on a "trend."