My colleague Nate Elliott and I have been thinking about the Facebook IPO. Our thoughts:
The world’s biggest social network will complete its initial public offering in a few days, with a valuation based largely on its strong history of innovation. But we have to wonder: Will Facebook ever focus any of that innovation on helping marketers?
After all, Facebook is fantastic at introducing great new features and services for its end users. The moment another social tool gains the interest of enough users – whether it’s Twitter’s rapid public chatter or Foursquare’s location-based check-ins – Facebook updates its own site to offer similar features to its legions of users. We’ve rarely seen a company borrow from its competition as quickly or as well as Facebook. And that focus on better serving end users has seen Facebook grow quickly over the years, even in the face of consistent privacy concerns.
But as good as Facebook has been at evolving to serve consumers, that’s how bad it’s been at serving marketers. In the past five years Facebook has lurched from one advertising model to another. Remember when the site charged marketers to host branded pages? Or when every page featured banners from MSN’s ad network? (You may choose to forget Facebook Beacon; Mark Zuckerberg would certainly prefer you did.)
Somehow Facebook still hasn’t stumbled upon a model that’s proven consistently successful for marketers, or that brings in the massive revenues to match the site’s massive user base. (The company made less than $4 in ad revenue per active user in 2011.) And its latest ‘big marketing announcement’ in February turned out to be mostly a tiny evolution of its existing ad model. At the same time, Facebook often stands directly in the way of marketers’ efforts to measure the performance of their programs.
The result? One global consumer goods company told us recently that Facebook was getting worse, rather than better, at helping marketers succeed. And companies in industries from consumer electronics to financial services tell us they’re no longer sure Facebook is the best place to dedicate their social marketing budget – a shocking fact given the site’s dominance among users.
The reason, of course, is that Facebook just doesn’t pay nearly as much attention to marketing as it does to user experience. (Not surprising, given its founder’s famous loathing for advertisers.) If Facebook did pay as much attention to the marketers who handed it billions of dollars last year, and who make the site’s very existence possible, maybe we’d see innovative new marketing solutions every six months rather than every few years. Perhaps the company would’ve spent a billion dollars on an ad exchange or marketing measurement tools rather than a simple photo-sharing app. Maybe, just maybe, marketing on Facebook would actually work.
But marketing on Facebook doesn’t work very well, and marketers can’t count on things improving anytime soon. We wish we could predict this IPO would serve as a new beginning for Facebook’s marketing offering, and that a new focus on becoming a grown-up business would inspire the company to put even half the energy into serving advertisers that it does into serving users. But we doubt Zuckerberg's going to wake up any day soon having acquired a taste for advertising, or even a proper understanding of it. And so every day more smart marketers are going to wake up and look for other places to dedicate their social resources.