Facebook, the darling of Web 2.0 and prophetically touted creator of the “new” internet, is shrinking faster than Speedo clad gonads in a January polar bear swim. And bad marketing is to blame.
“Wait,” some will protest, “Facebook is everywhere! Everyone all over the world knows about Facebook—how can you blame its shrinking number of users on poor marketing?”
I am not blaming it on people not hearing about Facebook. Heck, Facebook is an internet icon which will endure for years as a memorable Wikipedia entry.
But Facebook made a fundamental mistake which is going to take the once projected $15 BILLION value touted by the venture capitalists down to the level of a less than stellar govWorks.com.
Here’s why:
In order to make a profit, someone has to buy something. It’s not good enough to attract lots of free users. It’s not enough to explore the demon demographics of your free users. As thousands of StumbledUpon, Digg and Reddit promoted sites will tell you: Traffic does not equal income.
But Facebook—despite all its popularity—never figured out how to sell products to its users. Instead they made the ego-centric mistake made before the first dot com bubble burst: Being popular is better than being profitable.
Now, imagine if Facebook had chosen to adopt a better monetization policy. Imagine a Facebook where they not only collected email addresses, but sent those users each week a little email newsletter containing article bites about how to get more friends, interesting new groups and direct plugs for products their users would enjoy.
Let’s do the math:
2006 revenues were around $100 million.
But with 60 million users, an active marketing plan should produce between $5 and $10 in gross revenue per user, which would bring in $300 million to $600 million.
Passive (bad) marketing has cost Facebook at least $1 Billion dollars over the last few years.
For more info:
http://www.theregister.co.uk/2008/02/21/fb_nielsen_fall/
http://www.pcmag.com/article2/0,2817,2265105,00.asp
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