Facebook Is Quietly Proving Its Worth
Stuck in a 40 day quiet period following its IPO, Facebook has to show, rather than tell, that it has a real business model that works.
Stuck in a 40 day quiet period following its IPO, Facebook has to show, rather than tell, that it has a real business model that works. As the company's stock continues to fall -- its trading around the 26 mark nowadays -- the social network has covertly addressed its two weakest areas: advertising and mobile. As of now, the tech soothsayers say Facebook's advertising has neither advertisers convinced nor users engaged, but that's just on desktop. For mobile, the social network admittedly has no idea what it's doing, and in its SEC-imposed cone of silence, Facebook can't stick up for itself. But we can take yesterday's announcement of a mobile app center as a sort of symbolic retaliation. Armed with that plus this Comscore data set to come out next week, Facebook might finally prove it's worth something to investors.
During yesterday's announcement of a mobile app center, Facebook included some enlightening stats, pointing to both its importance and popularity. Facebook drove its users to Apple’s App Store 83 million times last month, notes TechCrunch's Kim Mai Cutler. Plus, of the top 10 grossing iOS and Android apps, Facebook was integrated into more than half on each platform -- six and seven respectively. Even with these positive stats, as critics have said, Facebook doesn't make much money off of this deal. Apple offers a 5 percent commission to referrals to app store downloads, but, as Cutler notes, Facebook gives 30 percent of its profits to carriers, so it's not making much. But, Facebook's giving up these short term profits for something more valuable long term. As Cutler explains: "It shows that the Facebook platform matters more than ever for mobile developers, which is a big step forward from last year. With Facebook’s expected integration into Apple’s iOS 6, they’ll become even more of a necessity."
This über-integration fits in with Facebook's overall strategy: Get 'em hooked. Facebook wants us to live our lives on its network, as we saw with Open Graph. The more reliant we are on Facebook to live our online lives, the better for the company and its investors. If we have to use another Internet program, like say, Dream Zoo or Spotify, Facebook would prefer that happens through its site. The company is becoming a very necessary middle man, which it likes since that means more users' time will be spent on the site. And, theoretically, that's more time looking at and clicking ads.
That second part, however, is suspect. And that's where this Comscore data comes in. "Unfortunately much of the recent discussion on Facebook effectiveness has gotten the story wrong," Comscore's Andrew Lipsman explains in a line Facebook will really love. The data even attacks that Reuters poll from earlier in the week that found, per Reuters' headline, "Facebook Comments, Ads Don't Sway Most Users."
"It’s time to advance this discussion of marketing and advertising effectiveness, but doing so requires that the debate centers on meaningful measurement approaches, not on self-reported recollection. The Power of Like 2 will present some new ways for thinking about effectiveness research in the social channel," ends the press releasing previewing next week's apparently exciting data. Facebook is a Comscore client, as AllThingsD's Peter Kafka notes. But that doesn't mean the company won't use this to shove all that "Facebook advertising doesn't work" back in our faces, which is just what it needs to counteract the growing conventional wisdom that it's failing.