So long, Facebook. It was nice making your acquaintance.
No, I am not actually closing my account on The Social Network. At least not yet anyway. But in the next 12-30 months, we are going to see some major, unpleasant changes in the way the powers that be within Facebook conduct their business and treat their exponentially bloated user base. After a nice conversation this week with Social Media Expert Christina Torri of Mindscape at Hanon McKendry, here are 10 predictions and observations that will be a direct or indirect result of the new IPO, which is going on as we speak. If I turn out to be wrong, feel free to come back and call me out in 2015
1. Facebook is now a For Profit Organization. For the first time in their existence, they HAVE to make money.
2. Facebook was never inherently designed to make money. If you’ve seen the movie The Social Network, or read the book on which the movie is based, The Accidental Billionaires by Ben Mezrich, you know the basic story of how the site came to be. The original premise of ‘The Facebook’ was to allow college students a place to connect online. Once it was made available to the masses, Facebook followed the ‘get as big of a user base as possible and then try to figure out how to make it profitable’ business model.
3. Traditional businesses measure growth based on revenue and profitability. A car company like Toyota can only measure growth based on how many people are driving their cars if they turn a profit on each car sold. Social networks measure growth based on usage and number of active accounts. This is fundamentally flawed from a business standpoint.
4. Mark Zuckerberg, CEO and Co-Founder of Facebook, by many accounts, is indifferent to money. While this can be a noble personality trait, it is not a good quality to have for someone whose responsible for a company supposedly worth somewhere in the ballpark of $100,000,000,000.
5. This new immediate pressure to be profitable will force the company to more aggressively push ads and other revenue generating activities, which will be off-putting to a lot of it’s user base.
6. As a result, Facebook will lose some of it’s fringe users. These are the people who aren’t really into the whole thing anyway – and probably comprise the bottom 10% of the registered accounts. They won’t necessarily go anywhere else so much as they will just simply deactivate or quit logging into their account.
7. This will cause Facebook to be more aggressive with it’s ads and such to make up for the lost revenue. The problem is that Facebook ads perform very poorly when compared to other online advertising models. Facebook ads are generally considered to be among the worst in the industry in terms of conversion rates.
8. As Facebook becomes more ad-centric, it will become less appealing to more and more people. Around this time a new social network will begin to gain popularity. It may be one that already exists today – or one that has yet to be dreamed up.
9. As the new social network gains more and more traction, Facebook’s users will begin the practice of maintaining an account on both networks. As the new network acquires users and becomes increasing more appealing than Facebook, it will become the hangout of choice. People will use Facebook less and less as more of their friends use the new network.
10. Facebook won’t fade away completely. Myspace has in a way found a niche in that the site is still very relevant to musicians. Myspace in no way appeals to the masses as it once did, but will probably never die. Facebook will always have a core user base, whether it is artists, photographers or some other niche or population segment.
(If any of that sounds familiar, it should – because that is similar to the story of how Myspace faded into ‘obscurity’ as people migrated to Facebook. I use the work ‘obscurity’ sort of tongue in cheek – according to Alexa.com, it is still the 156th more visited site on the Web in terms of pageviews. While that’s not exactly collecting edust in an ewasteland, it is a far cry from the number two spot they held (The same spot Facebook now holds, coincidentally) at their peak of popularity. Myspace became bloated with slow-loading user pages and a really inconvenient and bulky user experience, whereas Facebook (at the time) had a clean, simple interface that was immediately easy to understand and operate.)
What do you think? How does the IPO affect Facebook going forward? Share your prediction in a comment.