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THE NEW FACEBOOK

It is no secret that Facebook has been struggling to build a revenue model that can tap into its huge user base (official statistics below). They have experimented with various options, often to the dismay of its users, even tweaking privacy controls, so that their service can be of more direct relevance to advertisers. Take for instance their latest ‘product’, called Trending. Yes, trending. To quote their website, Facebook says, “Today we’re announcing Trending, a new product that’s designed to surface interesting and relevant conversations from all across Facebook.” Read their 16 January 2014 announcement here: http://goo.gl/vV1z7k

In a nutshell, they are trying harder to bring the average Facebook user closer to as many strangers as they can. While Facebook purportedly “helps you connect and share with the people in your life”, as it says on their homepage, they have no tangible incentive to do so. After all, in purely business terms, what will they gain from you talking to your friends, family and colleagues?

To make money, they need to put you in touch with advertisers — who pay Facebook to have you look at their advertisements, click through to their websites and pages, endorse their products and services in a calculated move that they hope will eventually grow their own customer base. The least that an advertiser could do on Facebook is to place its brand in your field of vision, so to speak. When you say ‘coffee’, automatically Brand X should be visible on your screen, making you think of them first. Fairly simple, when you see it.

Strangely enough, social media as a whole (yes, that includes Google+), not just Facebook, have been at the receiving end of flak for well, just being businesses intended to make profits. The average user of these largely free services/products feel that they are entitled to them, without any incumbent payback. They are also very vociferous about their defence of their imagined ‘privacy’, which simply doesn’t exist — they have already handed over most of their personal details to a private business when signing up, haven’t they?

In any case, where is the ‘business-sense’ in running a business like that? How will they survive in the long run (at some point, you will have to justify your valuation in real-world terms, which is revenue and profits) and who will, finally, foot the bill? FYI, Facebook’s net revenue represented only 1% of total earnings according to its 2012 annual report, and almost all its revenues came from advertising, not the average user.

FACEBOOK STATISTICS
(as available on 17 January 2014 from official sources)

• 874 million monthly active users who used Facebook mobile products as of September 30, 2013.
• 727 million daily active users on average in September 2013.
• Approximately 80% of daily active users are outside the U.S. and Canada.
• 1.19 billion monthly active users as of September 30, 2013.

With that as the context, see the video for a very articulate explanation of what all this means to the average Facebook user.

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