Will Facebook fail?

Facebook has broken one of the rules that every business owner must constantly remind themselves to stay competitive: They have forgotten that they don’t own us.

President Shimon Peres and Facebook's Mark Zuckerberg370 (photo credit: Facebook)
President Shimon Peres and Facebook's Mark Zuckerberg370
(photo credit: Facebook)
First, a fair warning: The opinions in this column aren’t likely to be taken seriously by many of its readers, especially those reading in on The Jerusalem Post website who are unable to spend more than three minutes between Facebook check-ins.
Facebook has essentially become the “desktop” of today’s hyperconnected generation. So, within the context of this column, I want to explore what Facebook is, who its clients are, and why I believe it will ultimately fail as the “forever connected” network in favor of current or future competitors – and what this has to do with you and your business.
Facebook’s profits are rising (to a not-too-shabby $333 million this quarter), and it seems to have reached the sweet spot of success. It has the growth and user-generated content to keep expanding and be able to launch new businesses at the push of a button.
As a business enterprise, the business model of Facebook boils down to Facebook giving its clients a service, so that it can give its owners, the shareholders, a return. The service they provide their clients, who are the advertisers, is that we, the users, will see ads that will be so hyper-targeted to who we are and what we want, so that it will simply be too irresistible for us to say no.
While site users join for the services provided free of charge, as time passes, many become clients of Facebook. Not necessarily in the traditional sense of buying advertisements on the site, or even developing apps that give Facebook a hefty cut of the profits, but also because Facebook’s algorithm changes show only a fraction of your friends’ posts to you – unless they pay to receive more prominent placement in your news feed and to stay there longer. And this is where it gets dangerous for Facebook.
It’s a good thing for its shareholders that Facebook toys with innovative new ways to increase site profits. And yet, while Google does the same with its products, from Gmail to YouTube, we’d all agree that if Gmail would begin to only show you 17 percent of your emails instead of all of ones that aren’t flagged as spam, we the users would quickly run for the exits.
Facebook has broken one of the rules that every business owner must constantly remind themselves to stay competitive: They have forgotten that they don’t own us; it’s users who make the whole enterprise hum. As soon as users feel they are being abused, negative emotions will become associated with the use of the site. And when that annoyance ratchets up to beyond an invisible red line, it’s off to the next new best thing.
By making those who have amassed friends and followers have to pay substantial sums to be seen by their own audience, they are annoying them the way a mosquito can be annoying. By having folks, myself included, now pay to post to make sure their status updates are seen, they are pushing it.
But hey, when Facebook is still profitable for the user because they generate business of the platform, they will pay, albeit if only grumpily so.
However, when the common folk post a status update on Facebook saying that they have been accepted into university, or that they finally managed to make toast without burning it, they have become conditioned to let the world know. How? By announcing it as a status update on their Facebook wall, or by sharing an image of freshly made toast.
But what happens when they do that and crave the acclaim – and that Aunt Zelda, who has been poking fun about their inability to make toast since childhood, doesn’t respond with a like or comment, they begin to wonder: Did Auntie Zelda notice what I posted? And if she hasn’t, who else hasn’t? And if many folks aren’t seeing it, even though they are my friends, then why waste the time using the platform? And what might they be writing on Facebook that Facebook has decided not to show me? Business-wise, this is dangerous territory.
Besides the value of understanding how Facebook works, there is a whole different point here worth thinking about: How do we treat our customers and make sure they are enjoying the experience? How can profits be maximized elegantly, without poking our clients in the eye? The more an experience can be improved, the happier the client and the longer lasting the relationship. And while they may be billions in the case of Facebook, no amount of short-term profits should blind the eye from creating an experience that your clients associate with fun and pleasure.
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Issamar Ginzberg is a business adviser, marketer, professional speaker and rabbi who has been published in more than 50 business publications.