Research firm Forrester is in Facebook's bad books for having the temerity to suggest the social network has failed marketers and is interested only in paid-for advertising.
The Forrester survey of 395 marketers in the US, UK, and Canada places Facebook rock bottom on a list of digital marketing channels in terms of creating business value, behind other channels such as Twitter, Google+, YouTube, and LinkedIn, and way behind the leading channels including on-site ratings and reviews, search, email, branded communities, word of mouth, and branded blogs.
It is certainly true that marketers are asking themselves if Facebook is still relevant. I was in a room full of senior Procter & Gamble communications folks just the other week and they were asking exactly that question. They, along with others, are wondering whether the Mark Zuckerberg-led behemoth is losing the hugely lucrative youth vote, as it were, and becoming a hangout for adults and seniors.
Indeed, during this week's Q3 financial results announcement, Facebook CFO David Ebersman admitted younger teenagers were using the social network less frequently and teenage use was flat. But, on the other hand, it is hard for any communicator or marketer to ignore a global audience of almost 1.2 billion people.
New media properties including BuzzFeed have built their traffic on the back of elements such as Facebook Share, rather than Twitter. Sharing is great for increasing engagement with the platform, but it doesn't produce any direct revenue, unlike newsfeed ads, which are inserted in users' Facebook feeds at the rate of about one per 20 stories.
Facebook would no doubt refute Forrester's claims by noting its ads are targeted to users' interests, though some question the quality of this targeting – I've certainly never clicked on a Facebook newsfeed ad…
This is a fundamental conundrum for Facebook, which clearly wants to prioritize the products that produce most revenue: the P in the PESO media mix. This is despite Zuckerberg's previous pronouncement in 2007, highlighted by Forrester in its survey commentary, that getting into mass media (which is what Facebook is, however much it might demur) and pushing out your content will be usurped by sharing among connections: the S in the PESO mix.
Forrester also points out that Facebook updates its ad tools and formats on an almost weekly basis, which you can track on our sister brand The Hub, while it invests virtually nothing into the branded content format that produces better business value for marketers but not so much hard revenue for Facebook.
Then there's the big M factor: mobile. Facebook had a rocky time pre- and post-IPO last year, suffering a backlash due to the botched nature of the Nasdaq launch and the fact that Zuckerberg and Co chose to stage the event at its Silicon Valley HQ rather than traveling to NYC to press the flesh with analysts and the investment community.
Around the IPO, it was noted by these snubbed analysts that Facebook's mobile offering had not caught up with user trends and was being outshone by other social channels such as Snapchat. The share price of the iconic social network – or social utility as it prefers to call itself – slumped well below its offer price and sparked concerns that all was not well with its long-term prospects.
But a concerted effort at improving its mobile offer has resulted in a phenomenal increase in ad revenue, from $150 million in Q3 2012 to $880 million 12 months hence. Mobile ads accounted for 49% of total Facebook ad revenue in Q3, which is one reason its share price has doubled in the past three months.
In my view Forrester has a point. Facebook is clearly prioritizing paid-for advertising over social marketing. But then why wouldn't it? Its latest financials suggest the policy is working extremely well for them and it now has investors to consider – what Zuckerberg said in 2007 was in a totally different context to his role now as CEO of a publicly traded company.
Facebook's huge global audience is still one that is hard for marketers and communicators to ignore, but I would like to see it investing more into branded content formats that produce better engagement for marketers. Its integration with paid newsfeed ads will then produce an even more potent mix through which brands and corporations can engage their audiences.