As Facebook desperately seeks to shore up avenues for making money as a social network, its allure is beginning to wane for some users. Can Mark Zuckerberg keep Facebook afloat, users enamored and investors happy with their stock purchases?
The Motley Fool notes how even 845 million active monthly users during 2011 only resulted in $15 million paid for virtual goods. These buyers are the diehard Zynga gamers, whose funds buy power-up in games such as Farmville, Vampire Wars, Mafia Wars and Castleville. Advertisers were nevertheless optimistic, which translated into $872 million in advertising for the last quarter. While the social network’s user base has grown to 901 million active users, those who log onto Facebook via mobile devices do not become paid eyeballs for the advertisers.
Bloomberg noted just last month that General Motors is re-evaluating its advertising contracts with Facebook, in part because the return for the $10 million spent in marketing on the social network has failed to yield measurable results. This goes hand in hand with Reuters’ reports of only one in five Facebook users ever making a purchase based on a social network advertisement. While Zuckerberg may well maintain how his social network was never meant to be a moneymaking platform, investors are bound to find it worrisome that 34 percent of previously frequent Facebook users now report spending less time socializing there. This number is offset by only 20 percent who reportedly increased their Facebook activity.
Behavior of investors reflects a certain skittish attitude. The Associated Press reports that during its initial public offering, Facebook began selling stock at $38 on May 18. Since then, the stock has spiraled downward. Closing on May 18 at $38.23 per share, the closing price on June 7 was $26.31, which is a 31 percent drop from the IPO price. Zuckerberg clearly hears the canary in the coalmine falling silent, which makes the new App Center for iPhones the much hoped for antidote to Facebook’s moneymaking potential. Venture Beat asserts this move effectively embraces the mobile user who previously fell through the social network’s advertising cracks.
Will it work to turn the tide on missed ad revenues? Consider the space available on the average iPhone, and the advertising potential is low. Then again, when used with an iPad, there is plenty of space to display ads and capitalize on eyeballs. If Zuckerberg succeeds in differentiating phone and tablet users with respect to ad impressions, he might have tapped into a potential new market.