Ed Cotton: Facebook’s Dangerous Game

Ed Cotton: Facebook’s Dangerous Game

What are the implications for advertising on the world's largest social network now that it has IPO status?

Sam McNerney
  • 3 february 2012

When Facebook becomes a public company-it’s obvious that it will be forced to generate ever increasing revenues from its user base. The only way the company can deliver these revenues is by selling more advertising and making more money through user transactions.

The advertising issue is key – currently Facebook is being use by brands to finely target messages to discrete audiences and with below average CTRs, it’s really all about branding. For most brands, it’s all about going where the eyeballs are, so it’s an imperative to be on Facebook, but questions remain around effectiveness and the real ROI on these efforts.

Clearly, with the move timeline and greater integration of applications, Facebook is gathering masses of data that can be used by brands for even better targeting. The challenge is obviously to find a way to go beyond simple exposures and to do something more compelling and powerful for both brands and users. I am not sure we are quite there yet- everyone is looking for the way to crack this and maybe Facebook will do it, or someone in the ecosystem that surrounds it-maybe the next great “start-up”.

The big challenge is how to expand the advertising offering, including in its currently under utilized mobile platform, without creating more clutter and thus undermining the user experience. The privacy issue is also fundamental with the EU already wanting to restrict the amount and level of data collected, which could put the brakes on some other company’s plans for deeper advertising opportunities.

Facebook’s success has been based on delivering a brilliant user experience that facilitates and manages connections in an entirely new way. Its brand power comes from the strength of the emotional ties it helps to build and in from the content individuals use to create and “cultivate” their personal identities.

However, as Zuckerberg understood from the earliest days, there’s a very fine line to tread and the pressures of being public, plus the incentives being offered to its sales people etc, could push the company close.

In the end, like most things, it’s ultimately about trust- if the brand can continue to win consumer trust it will develop and grow revenues, not just through advertising, but also in credits and payments, which could be even bigger than the ad business.

Facebook’s ability to manage its way to future success depends entirely on what it does to maintain the very delicate balance.

(Read original post here.)

Ed Cotton is the Director of Strategy at BSSP, and is curious about all things relating to brands, marketing and culture. Read more at influx insights.


Transformable Table Maximizes Utility In Small Spaces

Design & Architecture
Syndicated Today

How Fashion Became All About Fonts

Why a new wave of designs have put typography front and center on your clothing

Retail Today

GM And Audi Are Experimenting With Car Rentals In SF

The automakers are trying something new to capture the segment of urban dwellers who don't want to own a car


Get PSFK's Related Report: Future of Automotive

See All
Travel Today

This Vertical Forest Hotel Will Improve The Air Around It

An architectural firm is creating a lush mountain lodging in China with so much greenery that it will actually clean the atmosphere

Related Expert

Abigail Posner

Digital Strategy, Emotion and Technology

Europe Today

This Company Believes Insects Can Provide Biofuel To Power Our Future

A Polish group is testing out a new factory concept that can provide a source of renewable energy, and even serve space missions

Technology Today

Music Venue Caters To Virtual Reality Events

Boiler Room has launched the first VR hub for content creators to capture special footage for the masses

Gaming & Play Today

Automated Chessboard Lets You Play Against Anyone In The World

Square Off is an AI-powered board that can move the pieces on its own


Future Of Automotive
Scenarios Driving The Digital Transformation Of An Industry

PSFK Op-Ed Today

Creative Leadership Expert: Experiencing A Seismic Shift From Brand Loyalty To Interface Loyalty

Marc Shillum, founder of Chief Creative Office, explains why product designers must rethink the way they capture consumer attention

PSFK Labs Yesterday

The Keys For Exceptional Performance On And Off The Field

PSFK Labs' new report highlights five important insights for businesses to perform better than the competition

Technology Today

Contraband Recorder Helps Those In Need Capture Captive Conversations

Designer Marianna Mezhibovkaya created the device to help prison inmates capture crucial evidence of abuse

Advertising Today

A Compelling Brand Purpose Is Never Born In The Boardroom

Strategist and Designer Anna-Rae Morris shares why she believes all brands exist for a reason, and how Snapchat has upended our behavior

Fitness & Sport Today

Editorial Roundtable: The Xs And Os Of Performance-Enhanced Sports

WHOOP, ShotTracker, Rithmio, PlaySight, STYR Labs, EverybodyFights and Lift / Next Level Floats explain that we're only at the iceberg's tip of performance enhancement

Retail Today

Kodak’s Smartphone Is Inspired By A Retro Camera

Ektra is an Android phone with a powerful lens aimed at photographers

Sustainability Today

Modern Home Created Entirely Out Of Modular Shipping Crates

A project in Ecuador used the ubiquitous material to design a spacious and industrial-chic house

Retail Today

Retail Concept Offers Food Hall Inspired Space For Online Brands

The store will offer a lower cost way for internet entrepreneurs to try physical retailing

Advertising Today

Disney Retells Beauty And The Beast On Snapchat

In a partnership with LACMA, the entertainment platform drew from over 130,000 works in the museum's collection

No search results found.