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Facebook faces change for worse?

Posted in Advertising, Digital, Mel Varley, Latest reporters' blogs February 28th, 2008 by Melinda Varley

Facebook boasts over 60 million users worldwide and has more than 400 employees but still has failed to make a profit. Worse still, it’s suffered its first ever drop in new users, is this the first sign of the social network’s demise?

Facebook is run by a geeky 23 year old who runs his office like a frat house and doesn’t wears socks. In fact, he still dresses in hoodies and plain Ts. So why isn’t Mark Zuckerberg rich?

Microsoft may have paid £120 million for a 1.6 per cent stake in the social network, valued at £15 billion and Yahoo! first bid just £1 billion for Facebook in 2006.

And although £120 million seems like a lot of money, it will run out quickly, as has the capital originally raised, £12 million, from various investors to take the company global.

There’s no doubt that Facebook is extremely popular and is known the world over, but the site is free for users and has one revenue stream – advertising. And we all remember how Beacon bombed. So what’s next?

Blake Chandlee, talking to mad.co.uk recently, said that Facebook is currently working on advertising partnerships with global brands to build pages and links which will generate cash flow. However, I wonder how many people will sign to become a ‘fan’ of these brands when the hype of Facebook goes down and we can’t even make time for our friends.

So, despite what Zuckerberg may want, he has to face the reality that he needs visible advertising on the site. What’s the best way to increase advertising activity? Have click throughs – page impressions.

Maybe he’s catching on as today (28 February) Facebook revealed it is soon to roll out some major changes to its layout.

The refresh to member’s profile pages will mean you won’t be able to see a member’s entire profile on one screen, but will need to click through to tabs to see different sections.

Personal information will be on one tab of a profile, whereas the “wall” will be on a separate tab while a third tab will link to photos. Extra tabs will be customisable and members will be able to create them for their favourite applications.

This idea would mean Facebook turning away from its very premise – an easy way to keep in touch and up-to-date with your friends and family. The average person has 115 friends on Facebook, can you imagine how long it would take to catch-up on their life when you have to spend so much time clicking through their pages and looking for info.

Not only that, MySpace faced a slow down once it started to display too much advertising and it was revealed by many polls that users simply didn’t pay attention to what was being advertised. 

The uniqueness of Facebook was the very fact that everything was displayed on one page, it was easy to read and it didn’t take too much effort. But unfortunately it seems to be the only way the site can make money and even though Zuckerberg will deny it to his death, all companies are out to make money, not to “bring people together.” How much longer can Facebook go on if it stays as it is now?