On Feb. 1, Facebook went public, providing a long-awaited look into one of the tech industry’s most closely-watched companies.
In eight years the site has become the Main Street of social media, where people meet friends and find businesses.
At the moment, no one knows how much the stocks will be worth, but most estimate the price will be high. More importantly, perhaps, is what the filing says about the company.
For all its strengths, the IPO has revealed that Facebook still has a lot of weaknesses.One of its major weaknesses is advertising. Despite being a major source of Facebook’s income, the IPO reveals that its ads have a low “click-through” rate. In other words, users ignore them.
“I think people get good at ignoring banner ads,” Dr. Kristina Drumheller, assistant professor of Communication and one of the principal researchers of the MediaBuffs research group at WTAMU, said. “Sometimes those ads are on target, they’re related to a company name you’ve mentioned or who you hang out with. They can be spot-on,” said Drumheller. “They’ll continue to refine that, I think.”
The most direct effect this announcement may have on users is in how Facebook advertises.
“The monetization model of Facebook is what will change. Advertising will drive this change,” said Dr. Leigh Browning, associate professor of Broadcasting. “Indications are that Facebook will look very different in the future and be leveraged as a real advertising portal complete with rate cards and rich ROI [return on investment] for advertisers.”
The other problem is that many users do not find the banner ads relevant to their needs or desires. For Dr. Nick Gerlich, department head and professor of Marketing, as well as the other principal researcher of MediaBuffs, this problem is epitomized by the Beardo, a product whose inexplicable appearance in his ad sidebar he has blogged about.
“I’m not looking for the Beardo or whatever goofy product happens to show up on the right-hand side,” he said. “It looks like a crochet stocking mask for bank robbers, but it’s a beard. It’s gross. It’s like a fashion statement for bank robbers everywhere.”
One of the other ways the company might remedy their advertising troubles is by going mobile. Currently, Facebook displays no mobile ads despite mobile users being a large and ever-growing part of their user-base, but that will soon change.
“Zuckerberg’s figuring out how to get more advertising on the mobile app,” said Drumheller in a joint interview with Gerlich. “That could be coming out of the IPO decision.”
Gerlich speculated these changes could come within a month. However, users may find the ads more irritating than the banner ads found on Facebook’s website.
“I have a hunch the annoyance factor will be much higher,” said Gerlich. “When you’re looking a screen, it’s a lot easier to ignore a sidebar, but when you’re on your phone it’s a lot harder.”
