It might seem like we don’t like Facebook but that couldn’t be further from the truth. It is an excellent platform and probably you are seeing this for the first time on that platform. It allows us to keep in touch with family living overseas and to catch up with school friends we haven’t seen for years. So why the beef? Why are we continuing to sound a cautious note about the company and its prospects?
Let’s be clear, the view here is purely personal. We don’t have access to the analyst numbers nor to the top level briefings that the company hold so we can only report what we see at ground level. The share price slowly ticked up yesterday as there was an increase in click revenue from mobile up from 14% in the previous quarter to 23%. The caution was sounded by analysts who were worried that the cost of servicing mobile advertising is higher. We don’t pretend to understand any of that but what we do know is that the change they made was to allow sponsored ads to appear in your timeline.
We’ve touched upon the value of Facebook ads recently and there are two really big problems with them. Extending them to the timeline does not make them any more relevant to the user and the value of the advertising is still up for debate. There are some brands that will appear in Social media case studies and extol the virtues of this form of advertising but within the industry we are still to find regular compelling examples of local or national businesses that are happy to sing the praises of Facebook advertising.
But the worrying element is still the relevance. You still have the traditional ability to target down to the nth degree based on gender, age, likes etc. but now they are allowing you to target Facebook users based on their web browsing history. Seriously. It couldn’t get any more worrying. This fundamentally misunderstands the relationship people have with their computers and more importantly their phones. Google clearly understands what mobile is all about, they even gave a practical demonstration at a recent presentation. Try letting someone else use your phone to send a text. How happy do you feel? The phone is personal in a way that PC’s are not and this is now extending to tablets. People will feel very uncomfortable if their Facebook advertising truly reflects their browsing history.
And in the end it completely misses the point anyway. Facebook was the replacement for MySpace and Friends Reunited and it brought people together in a single platform like never before. The extension of this utility makes it the number one social interaction tool on the planet. But there’s the rub. It’s a social platform not a browsing or buying platform. No one we know starts their search for a product or service on Facebook other than asking for the number of a good tradsesman, and then they want recommendation not an advert. It’s like asking a Bentley Mulsanne to take part a formula one race or a McLaren F1 to taxi people about; it’s just a step too far and ultimately it leads to failure and disappointment.