5 Signs that Facebook is Turning Desperate for Money

on Nov 06, 2012

The pressure has been tough on Facebook ever since the IPO came out 5 months back what with naysayers questioning its every move. Analysts decried Facebook's inability to drive revenue from mobile users while also calling the "Social Network" as having the least RPU (average Revenue Per User).

Having to face the daily pressure of the stock exchange bell, Facebook is visibly turning desperate for any revenue stream it can milk.

Here are the top 5 signs that Facebook is turning desperate for revenue:

1. "Promoted Posts" for Users

Asking the average Joe/Jane to promote their post. Why would I want to pay to promote my post about my grouchy cat unless I myself am "socially desperate"? Desperate is written all over it.

"Promoted Posts" for Users

2. Default targeting for "anyone" when creating similar ads

This is a ploy to add existing "fans" to the target base of the ads. This means that the ads will also be visible to the existing fans. This drives up revenue since more people are likely to click on the ads even when they may not be relevant to the page for now.

This happens when you create a new ad, the default setting is "anyone" which you have to manually uncheck.

Anyone targeting by default point

3. Introducing the "People Talking About This" metric

Why did Facebook introduce the PTAT number? To drive up the ad revenue. Plain and simple. The PTAT number is majorly influenced by the "likes" that you get. And guess how you get the "likes"? Through ads. With brands living in a world where they always want to look better than the competition, PTAT is a killer revenue tool.

In fact, having a look at any random fanpage will tell you whether it is being driven by ads or organically. How? That's for another post.

People Talking About This

4. Constantly tweaking the EdgeRank

Of course, it is Facebook's prerogative to keep the EdgeRank algorithm a secret but to constantly change it so that marketers are always left wondering what to do next is unexplainable. The claimed average reach of each post on a page is 16%. Some marketers claim that actually it is even less than that. And, if and when you talk to any Facebook executive about how to combat this, their standard response is to sell the "Promoted Posts" feature in the grand American tradition of asking "would you like fries with that?” They might as well be asking that.

This brings us to the final point:

5. Promoted Posts

As a marketer, I have mixed feelings about the "Promoted Posts" feature. While it is a great push mechanism for advertisers where they can talk about discount offers/various schemes, it becomes a turn-off for the users and hence may end up in many people unliking the page.

Promoted Posts for Brands

In Facebook's case, where most of the social media marketing today is focused, this desperation is a point of concern for social media practitioners like me.

That is because the selling point for Facebook and the reason why it is such an effective way of marketing is because people spend a lot of time on it. In fact the youth urban demographic may already be spending more time on Facebook than on any other medium or website.

If Facebook continues to seem desperate at every point of user experience, it will surely have an effect on the time that people spend here. Remember the dialogue in the movie "The Social Network" where Sean Parker tells Zuckerberg that "Facebook is cool because there are no ads... don't kill it”? Well, I wouldn't say continue with that, but maintain some balance!


Nimit Kathuria.

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