In the conflicted territory today we have the tale of divergences on Facebook. First, let's dispose of the "bullish" side -- they got a couple of upgrades today, and people are buying (again) into the hype.
Next, let's look at the bearish side, which is all about numbers from Janet Tavakoli, one of my favorites when it comes to numbers (in other words she actually knows how to add), and since she's not a sell-side sort.....
Janet's primary points are that one has no way to know how many cats and dogs have "profiles" and thus the alleged daily users and such are a black hole, and in addition there's a problem with deceleration in user growth (this is commonly known as "saturation", and those who disbelieve it are those who believe that trees grow through the sky and to the moon.)
But my comment for the day is what I've noticed on the mobile application -- the intrusiveness of ads, which to me smacks of desperation.
Not long ago the top of their mobile app started displaying "Pages You May Like", which they claim are pages that others who are my friends did like. Well, ok, maybe (how do I verify that?) But more-recently they started sticking sponsored ads in front of that page, which now meant that the first two "screen worths" of content I saw on the mobile app were not user updates but rather were generated by them in the form of advertising.
Anyone who does advertising knows that there is a limit to how much you can shove in front of people before they turn you off. The challenge for advertising-supported media is to dance as close to that line as possible without stepping over it; the closer you can get without going over the more money you make.
If you go over it, however, you're in serious trouble as the consequence is usually a dramatic (and sometimes irreversible) loss of customer eyeballs.
Facebook has crossed that line for me on their mobile application. Thus far they have not on the desktop. A large part of the problem in the mobile space is simply one of real estate -- there is less of it on a mobile application, and it's far more precious.
It has been my contention, and continues to be, that this is the bottom-line problem for advertising-supported sites such as Facebook in a mobile world. The "annoyance line" for people using mobile devices is far too easy to cross because the amount of real estate available on a user's screen is much smaller and yet in order to get any meaningful return on advertising you have to consume much or even all of the top-level page of the user's experience.
But that goes directly against what everyone expects when they use your application -- they don't want advertising, they want content. They tolerate a certain amount of advertising, in short, but that "certain amount" can not become the focus of the user experience -- if it does you're cooked.
I don't see a solution for Facebook in this regard, and as such my intermediate and longer-term view of their prospects is best-expressed thus:
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
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