Unless you’ve been hiding under a rock for the last few months, you’re probably well aware of the collapse of Facebook’s stock price since its May IPO. Seemingly overnight, they changed from being an exciting opportunity for investors to being a dog – from the next big thing to the next big dud.
Facebook was supposed to be this cycle’s fairy tale. It was the bellweather property of the social era. The company would go public, the share price would skyrocket, and those who participated either as an employee or early investor would have enough duckets to dominate every game in the Zynga portfolio overnight. Facebook would go on to redefine what it means to be a Netizen.
But the yellow brick road was fraught with more peril than Dorothy ever endured.
- GM announced it was pulling its ad budget off Facebook because the ads were not effective. Others stepped forward with their concerns.
- A game of research “ping pong” commenced as studies were published both by peddlers of Facebook ads and search ad services, all claiming their area of focus was indeed comparatively effective.
- A start-up called Limited Run claimed that its data showed that Facebook bots were much more likely to click ads than humans.
Days later, Facebook defensively announced that 83 million of its almost 1 billion accounts were known to be fake. Less than 10%, but nonetheless a very large number.
Combine all of this with a share price that is roughly half what it was at IPO, a co-founder renouncing his American citizenship, and a leader whose first act as CEO of a publicly traded company is to take a honeymoon. It’s a lot to endure. (And I won’t even mention the flight of institutional investors and the capitulation of successful ones – both of those are more or less understandable.)
If your experiences are like mine, you’ve probably heard skepticism bleed over to your customers, clients, executives, and fellow marketers. People everywhere are questioning Facebook’s value and for good reason.
What can Facebook do to get its mojo back?
1) Respond to attacks on its ad model – surprisingly, they have had very little to say to counter critics of its ad platform. Surely, Facebook has data and case studies that prove how access to the social graph helps businesses and non-profits market themselves. Let’s see it.
2) Learn from search – the big question on everyone’s mind right now is “Is this Facebook marketing thing worth the time, money, and investment?” In the eyes of many marketers, search is a “more transactional” channel and is currently a better place to invest – at least for those less concerned about brand impressions and more concerned about “actions”. Search advertising works because it identifies people with purchase intent. Social can do the same.
3) Reaffirm its commitment to third-party developers – Twitter is making it really easy for Facebook to look like a benevolent social giant. All Facebook has to do is not make life more complicated for third-party developers who have built apps and services on their platform. Keep the rules more or less the same, and make a long-term commitment to an open, more or less unmetered platform.
4) Seek its “Overture” moment – Facebook has tightly restricted access to the Ads API to date. But at the same time, Facebook needs its “Overture” moment” and hasn’t gotten it yet. By opening the Ads API more broadly, they will be able to draw from a much larger and more creative pool of third-party social ad innovators than it does currently.
5) Nail the Facebook Mobile relaunch – sadly, the mobile Facebook experience is nothing like the fast, reliable experience of Facebook on the Web. As such, Facebook is regarded already and perhaps unfairly as a company that “doesn’t get mobile.” First things first, performance must be dramatically improved such that a mobile user doesn’t yearn for the Web experience. Baby steps.
6) Innovate again – Facebook’s innovations have been a lot slower and more subtle over the last year – and the major user experience changes have upset its users more than encouraged them (e.g. Timeline). They need another “Facebook Connect” type of innovation – something we all need but could be executed only by a company with Facebook’s user base and global reach. I’m thinking of something in identity/electronic payments, although innovation can come from any number of other scenarios.
Nothing Facebook has endured recently means that Facebook is over – not by a long shot. But I do think that the last six months have been a wake-up call for leadership of the world’s dominant social network. And I expect that we’ll see the company evolve to respond to an ever changing competitive environment – and its big boy, publicly traded pants for that matter.
Chris Treadaway is Founder & CEO of Polygraph Media, a social data mining company, and co-author of Facebook Marketing An Hour a Day with Mari Smith.