I was queried on whether or not when it comes to social media in general, and Facebook™ in particular, especially in the light of another “fantastic!” earnings report coinciding with a pop into (once again) a record high stock value, if I thought about (implying, maybe I should) reconsidering my prior assertions. My answer?
Here’s three reasons I gave as to why I still stand by my stance in the face of what everyone across the financial media is touting as “should put the naysayers to rest” earnings report via Facebook (FB).
First: As I stated and implied in the above referenced articles: What good is user growth if those “users” have no money, or completely disregard the inserted ads, making the paying for those ads to provide all the “free” too costly to the advertisers themselves?
Second: As I’ve also ruminated on why FB’s stock was rising of late, as opposed to, its falling during the “markets” latest run into never-before-seen-in-human-history-highs: “It’s probably much more to do with “buying” as to get “earnings exposure.” Much like it did this past Nov. when it (once again) hit an all time high, had a “hitting it out of the ball park” earnings report, then did nothing but slide as the “markets” lurched higher. For where is FB currently trading after such (once again) “blowout earnings?” Hint: Look back to last November – once again. So far even the overnight “pop” hasn’t held. That may be a clue, but only time (and money) will tell.
Third: This latest earnings covers one of the most interactive presidential campaigns in history – and it’s now over. Holiday “ad-spree-buys” are now done. So far the results (for retailers that is)? See any retailers latest earnings report for a “canary in a coal mine” type of analysis. e.g., Now even Macy™ is reported to be “shopping itself out.” As I’ve implied many times before: FB will (or now was) probably be the beneficiary this past holiday shopping season as advertisers do one last “throwing everything they’ve got before they go-out.” ad buy. I’ll use Macy’s as just one (and there are more) example to back up that argument.
Here’s a “bonus” for you to also consider: What will be the fallout as I implied before if all the content providers who are insulted (or won’t post because of fear of censorship) leave FB? If one “content creator” decides to leave, what does that do to their 10,000 followers? If 100 leave does traffic slow by 1-million? And what if those “1mm” are the ones buying advertisers messages, literally? Again, only time will tell.
But as I like to make the point that all too few fail to remember: AOL™ was still “crushing it” as late as 2001 when it was obvious to anyone willing to see that the “tech bubble” was indeed bursting. Anyone that is except for the financial press along with “The Valley.”
Today, much like then, when questioning anything about social media and/or FB the first response is “It’s different this time.” To reiterate: Much like it was when questioning AOL’s “ads for eyeballs” model back then. For if I remember correctly, “AOL had really figured out advertising on the web.” Much like FB today is shielded with the blanket response of “They really figured out advertising on mobile.”
© 2017 Mark St.Cyr