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Five Reasons the Facebook IPO is Troubling

According to a recent CNBC report by Kate Kelly, Facebook is rumored to be entertaining the idea of an initial public offering (IPO).

As most of you are aware, Facebook has been pushing back on investors and stakeholders who have wanted the social media behemoth to file an IPO for some time. Now, it seems that Mark Zuckerberg and company are eyeing first quarter 2012 as an ideal time to release the monster, $100 billion IPO. The story, which is neither confirmed nor denied, is raising questions around the blogsphere. So who am I to not jump on board and pick it apart?

Here are a few major issues the company is currently facing:

Other sites gain popularity: Facebook is no longer the only mega social site in town. Since its inception, Facebook has been the front-runner in the industry after pretty much sinking MySpace. But now it’s no longer alone. Take Twitter for instance. It’s not new, but the real-time message-sharing site continues to make strides in the amount of users it has and how much it is valued at (before revenue).  LinkedIn, of course released its IPO earlier this year and is slowly solidifying itself as the business networkers site. And let’s not forget Google’s +1 that is supposed to rival the Facebook Like button and help the company own the social search.

Early adopter fatigue: As the site continues to grow, the rate that people join will continue to slow. Ok, so a slow in growth isn’t the end of the world (yet) when your site population is over 700 million. But, consider this - Facebook had 11.8 million new users in May, which was down from 13.9 million in April.  There was even a decline of 6 million users in the US, as well as fall-offs in Canada and the U.K. Maybe users are jumping ship for other networks or maybe they’re just tired of using the site for gossip. Regardless, Zuckerberg’s goal of reaching 1 billion users may actually be out of reach.

They refuse to understand privacy concerns: The hot topic in the media continues to be about user privacy. Facebook has 700 million users and because of that, not only marketers are going to want in on the information. That many profiles are a hackers haven for personal information. And, if the company does officially file for an IPO you know marketers are going to be feverishly pushing to monetize this user information. That is a gift and a curse. The gift, of course is for Facebook to make boat loads of money off user data, but the curse is that users are becoming more aware of their privacy and what types of information is safe and unsafe to share. And even though people are smartening up about their privacy, Facebook continues to insult its userbase’s intelligence. The company recently patented their (creepy) facial recognition software that users, and now the FCC are a bit concerned about. And on top of that, the company has been hit with a potential class-action for allegedly collecting information about Web users via the "Like" button -- a social widget that news organizations and other publishers began displaying last year. When will they learn?

Users are wanting more: People are finding the site less cool, and are searching elsewhere for deeper, meaningful connections. Sure the site now includes Brands and business execs, but what Facebook has not been able to do well is harness the conversations between these company pages and the users that write on them. It just seems as though they have failed to see that it’s not necessarily the quantity of content a site produces, but more so the quality of content. The point should not be to sift through chatter to get the messaging (as a marketer) you are seeking, the point should be to simply design a format that facilitates real conversations that you can monitor and get involved in directly.

Because Facebook has paved the way for online connections, many social network users are now searching for connections and richer discussions beyond Facebook. Whether it be on a blog or a rival SNS they are anxious to share their views and opinions with people who challenge them, not just agree with them.

Mark Zuckerberg: Yes that’s right, Facebook’s fearless leader is as much of a problem for the site’s well-being as he is a help. Between him trying to slander Google recently in a PR stunt, to his continuous lack of appreciation for his users, a “CEO” can only cater to spenders and avoid his bread and butter (the users) for so long before they turn on him. At first it was cool to have a young, ballsy CEO who did his own thing and walked at his own pace. Now it’s just frustrating on a grand scale.

So while Facebook’s (inevitable) IPO is just around the corner, and it may be an immediate buy, people need to consider what exactly is happening within the Internet giant. For the first time in the site’s creation they are being doubted on their performance. And as users become more savvy and continue to look for new outlets to engage in they will most definitely be stumbling across new mediums of sharing both inside and outside of their established social circles. So you can bet that if users are jumping ship to find new means of expression, marketers will be close behind. 

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