A lot of industry analysts have spoken about the comparative enormous size of Facebook, at now over 1.1 billion users, as an exceptional (and earthshaking) statistic. With an audience of this size, massive success is a given. Or is it? The first quarter 2013 results are not indicative of the kind of game changer technology the analysts have been discussing when they talk about this business.
Certainly the online marketing market is poised for a revolution in technology. But we don’t see where Facebook is a leading example of it. Given the rapidly growing audience of small smart mobile devices, we would have expected to see triple digit growth in advertising revenue. The starting numbers from the previous year’s quarter weren’t very large, so 100% growth for a business with over 1 billion members should have been a given. But it wasn’t happening.
We don’t think there is really much difference, fundamentally, between Facebook as a membership driven site and Homestead during the mid 1990s. We think Facebook can’t get a handle around its members. On paper, one billion users is certainly impressive. But when they are disconnected, even more, when the content isn’t indexed into something useful, the actual mass of users is not very relevant to the vitality and velocity of the business.
Even worse, when management eschews a deep sense of why products make sense from a revenue perspective, we really need to wonder where this train is going. The mediocre, minimal bounce of the stock after markets closed tells us our views are not alone. Certainly management ought to rethink prioritize. Perhaps it would make more sense to accelerate the pace of “Graph Search” (we recently tried enabling this feature for our corporate site and receives the same message a few months back “We’re in Beta . . . We’ll be sure to let you know right away when you can add this feature”
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