The saga that is the Facebook IPO continues. Wall Street took a break from claiming to be the US Economy yesterday, but as of lunchtime this Tuesday, stock in the uber-social network fell below $30 for the first time. The brouhaha surrounding the IPO has largely concerned , but some are wondering if the real issue is simply the product itself. If it is, what should nonprofits and charities be doing with their Facebook accounts as the company deals with this shakeout?
Facebook has always had its detractors, as did the telegraph and the automobile. But Facebook has tended to inspire detractors rather than placate or even turn them into supporters. Take Anick Jesdanun at The Mesh Report, which pursues stories related to global stock markets. He believes that Facebook has already reached a plateau and the stock price simply reflects that fact:
If Facebook is to live up to its pre-IPO hype and reward the investors who are clamoring for its stock this week, it needs to convince some of the resisters to join. Two out of every five American adults have not joined Facebook, according to a recent Associated Press-CNBC poll. Among those who are not on Facebook, a third cited a lack of interest or need.
If all those people continue to shun Facebook, the social network could become akin to a postal system that only delivers mail to houses on one side of the street. The system isn’t as useful, and people aren’t apt to spend as much time with it. That means fewer opportunities for Facebook to sell ads.
Which means investors are not keen to hold the stock because Facebook can not find viable revenue streams. The early investors, don’t forget, got loads of stock options as collateral for loans. So they get paid back on the loans/investments, and they get to sell stock they didn’t buy. For such investors, the stock could go to $5-6 a share and still be worth a chunk of change.
In the buildup to the IPO, Facebook rather quietly established a few changes to its interface, including a ticker of “Trending Articles” and advertisements that might appear because a friend ‘liked’ the product in his or her account. Such redesigning of the users’ experiences is surely meant to stimulate ad revenues (In my own account, I see only the thinnest difference between many of my trending articles and adverts anyway.).
But with these changes have come some strikingly negative reactions. One of the more thorough analyses comes from Prasant Naidu writing for SocialMediaToday.com. He finds plenty to complain about for each of the advertising streams that now appear on the new interface:
Since ‘Facebook Offers’ are free for now, get ready to see all kinds of cheap offers that you wouldn’t want to see but will have to since someone from your friends has availed it. Facebook Offers could be saved if Facebook could monitor it or provide a way by which we could manage it. Otherwise it would be as clueless to the user as most of thepopping up everywhere on Facebook.
Nonprofits need not worry about the stock price, unless they are large nonprofits with endowments that went after the IPO in the hopes of increasing returns. But that is an investment question and outside the purview of our blog.
For nonprofits and charities wanting to reach out to their constituents, donors, and potential colleagues, Facebook remains a social network of some 156 million Americans (and some 900 million users worldwide). Even if it plateaus for a while as ‘a postal system for one side of the street,’ that street is awfully long and your organization still has plenty of people it could and should be reaching on the platform.
But nonprofits should consider the development of advertising revenue and interface adjustments − at least in the shorter term. Does your nonprofit want to be associated with products its followers are buying on their own time? Does it want to be associated with any enterprise that will live or die on its ability to generate income from advertisements? Conceivably, larger nonprofits (for example, the American Red Cross) could compete for eyeballs in a growing deluge of ticking advertisements. But local ones? And what if Facebook feels compelled to charge for accounts or for posting updates?
These latter questions are not in play yet, and may never become relevant. But now that Facebook is a public company that needs consistent and growing revenues, the social network’s cool factor could be jeopardized. Nonprofits should already be treating their Facebook Page as but a tool in a larger social-media toolbox. Nevertheless, the value of that tool might be moving out of the control of those nonprofits.