Now, lots of people don't like Facebook. Some of it is jealousy: you can't make $100 billion in your IPO without bringing out the haters. (Of course, some people are upset because it now seems their initial valuation might have been based on withholding some more negative forecasts.) But I am on record as hating Facebook before it was cool, writing about how Facebook may not be able to live up to the hype back in 2010, and last year speculating that Facebook's brand will not allow it to become a place where people buy things. My dislike is grounded not (just) in jealousy, but it real questions about their business model.
If I were to break down the logic that has made so many people think Facebook is worth so much, it is this: they have gotten a billion people to reveal tons of information about their lives, which will let companies conduct personal marketing at scale, reaching millions of relevant customers with exactly the right message. But one of my favorite authors, David Goldman (aka Spengler) makes an interesting point challenging that assumption:
No one is likely to learn much about anyone else by reading their Facebook page, or, indeed, by becoming their Facebook "friend". A Facebook page is constructed to maximize our appeal and white out our warts. We learn as little from the pages of Facebook "friends" as prospective employers learn about job candidates from a resume.Later, he crystalizes the central paradox of Facebook:
[Facebook] attracts hundreds of millions of users by providing them with a platform for narcissism and the means to lie about themselves more persuasively, but it hopes to make money by learning what it is that they really like, the better to show them advertisements. Sadly, the system is worth a great deal of money, but not 100 times earnings.I said earlier that digital marketing has three pillars: personalization, measurability, and interactivity. Facebook superficially seems to offer those things, but does it really? As people worry more and more about what their Facebook profiles are telling marketers (and family, and potential employers) they are likely to curate their digital selves more and more, stripping out a lot of the quirky or embarrassing details that would help marketers understand them as individuals. So much for personalization.
But Facebook is certainly measurable, right? Well, you get a lot of data from marketing on Facebook, which is good. But unlike search marketing on Google, for example, there isn't a clear answer for the question, "How much is a Like worth on Facebook?" People who really get it know you can probably define the value of that relationship for your brand if you're willing to crunch the numbers, but what people want is someone to say, "It's $8!" so you can build some assumptions into a marketing plan. But I would contend that since any marketing activity on Facebook (for most brands) is going to be geared towards generating goodwill and brand equity, rather than a direct response sale, measuring the value of Facebook marketing is going to be as squishy as measuring other forms of brand-building tends to be.
Finally, interactivity. Surely Facebook wins here, right? Well, for some brands. Brands that can take a point of view and be controversial, or have a large enough "cool factor" that those folks using Facebook as a personal advertisement want to associate with it. But there's a catch: the more brands that are in the conversation, the less attention there is for each brand. And unless you can define a unique audience segment you want to talk to and be consistently relevant and interesting, you're likely to be talking to yourself. So while some brands may develop a cohort of engaged followers, Facebook can't guarantee followers the way TV can guarantee eyeballs or Google can guarantee clicks.
Maybe so maybe there's a reason that a lot of companies, most recently GM, are saying that their Facebook ads aren't working. Of course, it might be that they don't know how to use the platform, but if a large and sophisticated company like GM fails on Facebook, we should expect a lot of other marketers will, as well. That hardly makes it a universal platform, and calls into question whether it will ever live up to that huge valuation.
I believe Facebook can be a tool to help you find your audience in the digital world, but it is hardly the only tool, and it frequently may be the wrong tool. It has fundamental limitations that will keep it from being a one-stop shop for marketers. But digital is much, much bigger than Facebook: it includes everything from online video to search and display ads to niche social media to this humble blog, and within those multitudes is a solution to most any marketing challenge. So go ahead, doubt Facebook along with me if you'd like, but don't let that stop moving you towards the digital future.