Some time ago I wrote that Facebook was doomed because the business model relied on erecting billboards in parks.
People were there to play, not be sold to.
Since then, Facebook has become bigger than many medium-sized countries and has been valued at more than $50 billion by investment bankers.
Oh and my Dad who is 74, is now on Facebook.
So if Facebook is bigger than most countries and worth a lot of money, how can I be right?
The answer is in comparing Facebook to Google. Google has become uber-successful by opening advertising to the masses. Anyone with a credit card and a website can advertise to qualified buyers fast. Google make it really easy by giving away advertising vouchers so anyone can try before they buy. The results are instantaneous and infinitely measurable.
Facebook on the other hand provides a weak value proposition for advertisers. The Facebook audience is not shopping for a gift for Aunt Rhonda in Ohio, they are looking to see what their BFF is up to, or to LOL at a chimpanzee eating its own poo. Or perhaps they are planning a revolution as recent events in Egypt demonstrate.
Whereas Google is a community of buyers and shoppers, Facebook is a community of thrill-seekers, bored adolescents, peeping toms, and horny perverts. They are very disengaged consumers.
U.K. Facebook exec Stephen Gained sees a future where company websites are made obsolete by Facebook. His argument is that Facebook offers more ways for consumers to engage with brands through devices like the Like button, and that visit times to Facebook average 28 minutes – much longer than most company websites.
The metrics make for a compelling argument but Facebook is still a sad, closed, blue world offering low clicks and ROI.
Building a list of fans is a great way to promote your brand, model but it is a poor way to sell product. Most of the commerce success stories are just hyperbole, the social media community are so desperate to demonstrate value they promote small and meaningless examples of why Facebook will dominate the Internet.
So I agree that Facebook is a great place to recruit a graduate, promote a new shampoo, or run a competition to build brand awareness. But if it is engagement and revenue you’re after then search is the clear winner.
The focus on the short tail is not exactly what makes Facebook another MySpace and not another Google. My completely unprofessional advice to Facebook investors beguiled by the $60 Billion valuation is to get the out now.
Take a profit and wait for the bubble to pop.