Zuckerberg in Critical Condition: Update

Published by: Meredith Thornton    |   Category: Blog, Marketing, Social Media    

Back in May of this year, prior to Facebook going public, I discussed Facebook’s grim future and outlook in my original blog article entitled Zuckerberg in Critical Condition. I figured, as an avid social media junky, I would break out my freshly dusted off Magic 8 Ball again and follow up with a “Part 2” update. Interestingly so, I asked the Magic 8 Ball if Facebook would be alive in 2 years and the response wasn’t what I expected. I gave it a really good shake, asked the question and waited for the answer to show itself. Out of the darkness came the answer, “Not Likely”.

Zuckerberg in Critical Condition: UpdateFacebook’s stock market value is in the toilet, its user growth is waning, and it is currently struggling to capitalize on the mobile front. Facebook’s attempt to increase its customer base is far-fetched. With approximately 75% of all US internet users now on Facebook, it has reached an unparalleled level of market saturation, with no opportunity for user growth. Also, based on its barriers to entry in a few key international locations, its goal to expand its presence in these developing countries is not going according to plan. China has not let down on its strict censorship laws, and other vital, yet underdeveloped regions lack the infrastructure necessary for Facebook to gain a following and sweep up new users. Furthermore, user engagement is on the decline, and users that were so loyal to Facebook are now on the search for new, rival social networks. To break it down, those that are interested in participating in social media already have a Facebook account, and those who have had a Facebook account for a while are bored with the existing features and are turning their attention to other social media that offer something different.

Doesn’t seem like Facebook’s future is looking too bright, does it?

As the stock went public at $38 and closed at $18.81 this past Monday, it’s currently picking up the pieces from its botched IPO and salvaging what’s left to ride out the storm. Investors that were itching to get a slice of Facebook are now realizing that the IPO was no more than a media frenzy and an overhype from the get go.

For Facebook, success in the past has been highly dependent on ad revenues. However, advertisers are realizing that they are not catering to those in a buying mindset. These Facebook users have developed a case of banner blindness and have ultimately become immune to the ads that are “ineffectively placed.” Advertisers continually turn to Google, which has mastered the art of placing advertisements next to contextually relevant content, or to more inexpensive, direct forms of marketing, like targeted email marketing, that delivers an advertising message right to the inbox of consumers and business decision makers worldwide.

I personally cringe at the thought of Facebook disappearing as a social media platform within the next few years. However, if Facebook refuses to make changes to its revenue model and does not evolve at the speed of its loyal users, Facebook is on a fast track to failure.

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One Response to Zuckerberg in Critical Condition: Update

  1. Paul says:

    Most public companies exist ‘for’ the stock market. Facebook exists ‘instead of’ the stock market.
    They did collect ipo proceedings – cash in the bank. The stock price do not matter for them – unless they do secondary offerings.