Give Mark Zuckerberg credit – he realized Facebook was behind when it came to mobile and he forced his company to adapt quickly. It’s reminiscent of Bill Gates coming to terms with the web back in the 90s.
I never asked for them, but I’m now getting regular emails from Amazon regarding local deals. With their massive customer base, Amazon figured out they could go head to head with Groupon with the flip of a switch. Of course they had to start working sales in each market, but they had a built in customer base right away.
Groupon on the other hand has been flailing, and now the company has the might Amazon gunning for its business. How long can Groupon survive like this? I suspect at some point the company will need to be sold off in a fire sale. It won’t be the first Internet company to make the mistake of turning down a massive acquisition offer only to regret it later, but it will probably be on the short list of egregious example for a long time.
With the recent court decision throwing out the FCC net neutrality rules, there’s a legitimate fear out there that the Internet as we know it could be destroyed by greedy telecom companies that creat a pay-to-play system that benefits large web companies and screws everyone else. The prospects for destroying innovation on the web seem real, and articles like this detail the potential threat.
On the other hand, some who have studied the decision see some positives as well.
The real issue will be whether in the future there will be viable Internet access options that permit the free-wheeling web we’ve known for years. These huge telecom companies have these rights under rules permitted by the government. It seems to me that there’s a huge opportunity for politicans to push for net neutrality and the notion of non-discrimination on the Internet. There’s also an opportunity for ISPs who will market neutral online packages.
Let’s see how this plays out.
Facebook is playing games with your timeline. This has always been the case, as timelines don’t work like Twitter feeds where you see every Tweet in real time from the people you follow. But anyone who has created a Page on Facebook and built a follower base is now realizing that most followers no longer see their Page updates. Facebook is manipulating its algorithm so that only a small percentage of page updates are seen by followers. Then of course, they prompt you to pay Facebook so that more of your followers will see the update.
Facebook wants revenues, and in many ways that has resulted in Facebook finally jumping the shark for brands, bloggers and publishers. If you’ve spent time and money building your Facebook following, you have to be upset by this. What’s the point of taking the time to update a Facebook page if only a handful of followers will see it?
We’ve experienced the same thing with our sites. We’ve methodically built a Facebook following the right way, doing it organically. But posts that were seen by 500 people are now only seen by less than 100 people. The bottom line is that Facebook will not be a source of online or mobile traffic unless you pay Facebook. Sorry, but as Mark Cuban explained, Facebook will no longer be the top social media priority for brands when there are other options out there that don’t limit which followers can see posts.
Facebook will still be important simply from a branding point of view. Brands have to have a Facebook presence these days due to the size of the network, as consumers will seek out a brand’s Facebook page sometimes in lieu of a brand’s website. So having a presence with excellent content and regular updates will still be important. But now it probably makes more sense to update a brand’s Facebook page only once or twice a week with excellent content that conveys the brand message as opposed to daily updates. Think of it as an organic billboard for the brand. But unless you’re willing to spend big dollars, you’re better off moving away from Facebook for specific promotions or as a way to drive consumers to your page. Brands can cuts costs by shifting away from Facebook and building Facebook followers towards services like Twitter where the efforts to drive engagement are rewarded.
These developments present an ominous problem for Facebook. We’ve clearly moved well beyond Mark Zuckerberg’s original vision of creating something “cool” that people will want to use. And that’s understandable as Facebook is now a public company and needs to drive revenues. Of course selling out was inevitable. But have they gone too far? The tradeoff between the user experience and the blatant push to get brands, publishers and bloggers to pay up so that users who “Liked” their pages can actually see updates has become obvious to everyone using the system, and the Facebook brand will suffer. When I post something to our accounts, and then see only a handful of our followers will see the post unless we pay up, I begin to resent the brand. Facebook becomes a typical, blood-sucking corporation as opposed to a cool service that lets users see updates from Pages they decided to follow. It’s now a racket.
In the short term, this strategy is working. Facebook’s revenues are booming as they have gamed the system they have created. But we’ve seen before that things can change quickly in today’s world as new technologies disrupt the status quo. Young people have already abondoned Facebook because that’s where their parents can monitor them. Sure, they’ll probably come back when they go off to college and want to keep in touch with friends. But Facebook is now alienating the entire blogosphere. Bloggers and publishers are already being squeezed by decling advertising revenues. They don’t have the budget to pay for visits, so they’ll move away from Facebook if there’s no benefit to building a follower base. Brands that do have budget will also see diminishing returns for building a follower base, so at some point they will shift their social media budgets.
It’s difficult to bet against Facebook, and this column has nothing to do with Facebook’s stock. It has to do with the company’s product, and the obvious fact that Facebook is manipulating its service to drive revenues as opposed to improving the user experience. At some point, this will probably catch up to them.
Twitter’s IPO went very smoothly, unlike the rocky debut experienced by Facebook shares. The stock closed at $44.90 per share, up considerably from the $26 IPO price. Twitter founders Jack Dorsey and Evan Williams also made out nicely, as they agreed to lockup agreements in lieu of selling shares through the IPO. Both are billionaires on paper.
Now we’ll see if Twitter can now live up to this IPO hype. It’s an incredible services, but its revenue and profit numbers are much smaller than those of Google and Facebook when those companies went public. We’ll see what kinds of revenue-generating projects they are willing to consider, and whether users will have a problem with any of them.