Prospects for Facebook look better than ever – based on what exactly?

Written by on August 26, 2016 in Opinion with 0 Comments

Chewing Gum GirlFacebook spokesmen may well go on record and say that they are getting round ad blocking attempts ‘for the principle of the thing’ but when a company makes 95 percent of its revenues from advertising you have to wonder – just a little – about the motives.

Apart from our oft repeated sermon on putting all a company’s eggs in one basket, presumably one day soon, Facebook ‘customers’ will realise that they are the product – not the customer – and get a little annoyed.

It is also debatable (OK, a bit dodgy) to fool ad blocking attempts by making adverts look like people’s posts.

There are also the first signs that brands are realising that this myth of personalised targeted advertising is, well, a myth. Procter and Gamble have cut back on their targeted advertising spend with the social media site. Soon, too, brands may rumble the fact that Facebook and others are selling them adverts based on flawed data. The Media Rating Council says that an advert has been viewed if half of it is visible for one second. They also say that a video has been viewed if half of it is visible and it rolls for two seconds. On that basis almost every advert ever posted on Facebook has been viewed.

What is strange is that these, and other, signs that the battle over advertising is just getting started, going to get nasty and be fought in public seem to be ignored.

Some people seem to be seriously considering whether Facebook’s value could reach $1 trillion. Some, Barron’s for one, thinks that the company stock could grow more than 20 percent on advertising growth. Its stock price could hit $153, up from $124 today. It has, according to Barron’s, ‘Instagram, Messenger and WhatsApp which have yet to fill up on ads’.

Joy.

Yet people, particularly younger people, do not like adverts, particularly the 95 percent of adverts which are rubbish. They also do not use Facebook to the extent that older people do. They also hate giving out their number, which does not bode well for the new idea of allowing Facebook to see the phone numbers of WhatsApp users.

So what else does Facebook have going for it, just in case the advertising battle proves too much? Apparently, only five percent of its revenue.

It, like Google, has a bunch of ‘moonshot’ programmes, based around infrastructure. It did a deal with Microsoft to lay a new cable under the Atlantic. It is planning to deliver high speed internet via lasers (just don’t look at the drone). It is planning to deliver internet to rural areas, via its Open Cellular play (although the back haul has yet to be thought through). And its Telecoms Infra Project is a way to speed up innovation, but is not, in itself, a product.

While all this is going on, Apple is quietly doing something very clever. They have stated that they will respect users’ privacy completely. To them, their customers are not the product, and never will be.

As David Birch says, and has been saying for a long time, privacy (and therefore security) must be the public facing part of the customer proposition. We can only agree that the Apple approach is a very good thing.

It is early days but whether all this bubble-like euphoria about a business based on advertising will prove us wrong, only time – and not a lot of time – will tell.

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About the Author

About the Author: Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet. He is publisher of DisruptiveViews and previously BillingViews. .

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