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May 23, 2012

The science behind Facebook is it for business or pleasure?

The world’s largest social-networking company saw a £2.2 billion drop in share prices on Monday at the stock exchange in New York. This was an immense shock to Mark Zuckerberg as shares were expected to soar at the hands of the investors.

Is this the beginning of the end for Facebook or has it always been just another social media bubble waiting to burst? There are a number of reasons claimed to be responsible for Facebook’s decline in value. The Washington Post’s online article has received numerous comments on the matter.

Facebook is a free to use platform where people visit to socialise, see what their friends have been getting up to and chat. It is becoming more apparent that users can choose to block out advertisements, unlike television, and are choosing not to engage with sellers.

I think the reason for the fall in Facebook’s share price is there is still an unclear path to make any real money. Facebook’s only worth, at the present time, is their database of users. Like Benjamin Cohen said in his blog for Channel 4 News, Facebook would have done better to split their shares between their billions of users, thus encouraging us to keep using their platform, increasing their worth.

Steve Rosenbush shares a similar view that Facebook’s true worth, their users and their behaviour has no real worth until marketers have a strategic plan of how to use this data. The drop in Facebook’s IPO shows that it’s glowing halo is not permanent and it could be the start of faith lost in social media.

I see Facebook as a way to keep in contact with friends overseas, the best thing that they can do for now is to keep their users happy, which the recent change to time line and their unreliable photo uploads are doing the complete opposite. Facebook has been massively over valued and would require millions of adverts in order to produce the revenue it predicted.

I think that advertisers need to re-think what they want from Facebook. I personally would not buy a product from a website I saw on Facebook. I would maybe read about a website and be educated about what a company does, but I would not use a direct link to purchase from Facebook as it stands.

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Comments

  1. Chris Norton

    Nice post Lizzie and an interesting take on it. The data is the real value as you say but the fact they hired Google’s top business person to help monetise the site tells you they always meant business. I think it’s totally over-priced and is only going one way but Bono is sure to be happy with his little investment that just scoped him $1.5billion.

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