Is Facebook Flagging?

Since becoming a public company, Facebook shares have dropped by 29%, reducing their intial market value by US$30 billion over the last month.

The website generates most of its revenue from advertising but a recent survey indicates that four out of five Facebook users have never bought a product or used a service as a result of Facebook banner ads.

The poll also revealed that 34% of Facebook users are spending less time on the site, and the increasing use of smartphones by current Facebook users to access accounts is further stifling advertising potential.

Facebook Fatigue?

In 2008, Facebook finally overtook rival My Space to become the top social networking site -measured by number of monthly unique visitors- and currently boasts 900 million members. However, Facebook are struggling to turn this customer base into advertising revenue and to keep users interested. Are we finally tiring of what has become one of the most popular online destinations?

The latest attempt to combat Facebook fatigue, by introducing ‘Timeline’, was met with widespread discontent. Recent scandal (see below) and the fact that approximately 50% of employers have completely banned Facebook in the work place are turning users off, and sales growth is slowing.

Facebook Feuds

One of Facebook’s main competitors for online advertising is the search engine Google, who were hit by a major smear campaign in 2011 regarding privacy policies. The anti-Google campaign was orchestrated by major PR company Burson-Marsteller, and it was later discovered that they had been paid by Facebook.

The social network was at the centre of yet more scandal in November 2011 when private accounts were hacked and pornographic images were displayed in user profiles. That same month Facebook settled charges that it had deceived customers by failing to keep privacy promises.

The poll also reported that 21% of those surveyed do not have a Facebook account and the reasons given for the reduction in Facebook use were that the site was ‘boring’, ‘not relevant’ or ‘not useful’. These views are likely to become more widespread if Facebook do not put their house in order.

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