Does Facebook have staying power?
The social media site may be worth $100 billion, but its long-term strategy is still unclear
The run-up to Facebook's first public stock offering, with shares to begin trading today, has inspired considerable speculation about the social media site's dollar value.
The latest estimate of Facebook's valuation is $104 billion, based on the company's initial share price of $38 US.
Come the weekend, founder and CEO Mark Zuckerberg is going to be even more obscenely wealthy – that's a given.
But market capitalization aside, will Facebook remain the be-all of online interaction?
While the site has more than 900 million followers worldwide, an Associated Press-CNBC poll released May 15 suggested that half of Americans believe the social network is a fad and will lose its currency in the near future.
That poll was followed by news that General Motors will stop buying ads on Facebook, saying that its $10-million-a-year marketing efforts on the site are having little effect on consumer car purchases. (GM will still keep its free Facebook pages going.)
While these seem like indications of Facebook’s waning influence, many experts say the world's dominant social media site will almost certainly remain robust.
"It's got hundreds of millions of people who use it every single day — I don’t really see that changing," says Brian Barrett, managing editor at the popular U.S. tech blog Gizmodo.
"Facebook is still going to have that kind of volume, and it's still going to be the default mainframe for social activity" for many years, he says.
Adds Sidneyeve Matrix, a media professor at Queen’s University in Kingston, Ont., "the best case in point about whether this site has real staying power is that it's a cornerstone of our digital culture."
"It’s the first place you go to find your news — not just about your [social] network, but about the world. All the news outlets are there – it's the place we go for entertainment, education, information."
Errors in strategy
Facebook supporters like to tout the statistic that one out of every seven minutes spent on the internet is spent on Facebook. But detractors say that, for all its popularity, the company has made some strategic errors.
Tech watchers have also panned Facebook’s mobile presence, saying the site looks cluttered on BlackBerrys and iPhones, and doesn’t boast the same ease of use that it does on desktop computers.
"Facebook’s mobile strategy has always been a huge compromise and that has not stopped people from primarily accessing the site through their BlackBerrys, Androids and their iPhones," says Matrix.
As for the privacy problems, they "are well-documented and not a deal-breaker for users," she says.
Adrian Ebsary, an Ottawa-based social media expert and creator of the blog The Attention Economist, says Facebook's most glaring problem is its walled-garden model. Namely, the fact that you need to submit a "Friend" request — and have it accepted — in order to interact with fellow Facebook users.
"Their big flaw is that they're based on reciprocal interactions," Ebsary says. "Whereas with Twitter and Google+, you can circle around and read what people are writing. You don’t have to follow [someone on Twitter or Google+] to be able to interact with them."
He believes Facebook's design architecture is cutting it off from a wider audience.
An all-inclusive model
There has been great interest recently in more selective social media sites such as Path (micro-blogging) and Pinterest (a photo-sharing bulletin board), but experts don’t consider them true competitors.
Pinterest and Path "are examples of the type of social media that we’re going to see in the future," says Barrett. But he feels "they’ll be complementary to Facebook, instead of supplanting it."
The ostensible impetus for the IPO is for Facebook to raise more funds in order to create applications like its Timeline archiving feature, as well as to invest in other companies. Earlier this year, Facebook announced it was buying photo-sharing app Instagram for $1 billion. The deal is currently subject to a competition probe.
By opting for public ownership, Facebook will be compelled to guarantee shareholder value by constantly striving for greater profits.
Given how many companies already use the site to promote their products and services, Sidneyeve Matrix believes that the next logical step would be for Facebook to embrace e-commerce.
"A lot of organizations are using it as a marketing platform, and so it will be the next place where we will go to buy things," she says.
But Barrett doesn’t believe Facebook will move in that direction. He predicts the site will redouble its marketing efforts, which could include more ads in news feeds, more sponsored content and "a lot more messages from Pizza Hut showing up in your Timeline."
Given its solid position in the social media firmament, is there anything that could fell Facebook?
If Facebook does end up lapsing, it will be because of "a generational timeframe," says Barrett. By that he means a group of kids who won’t want to be on the same social network as their parents.