The True Cost Of Facebook Keeping Secrets From Its Users
I’m sure Facebook and its partners will weather the storm. But it’s going to lose a year of gift buying, incremental ad buys, and related revenue. All because it doesn’t know how to treat customers with respect.
Read my whole post on ReadWriteWeb on Facebook risking two HUGE new revenue lines simply because they have never learned how to communicate upcoming changes with their audience.
Instead of controlling the conversation by proactively announcing the changes they’ve made, they make platitude about how much they care about your privacy (see recent Sheryl Sandberg quote)
So later they’ll have to deal reactively to an irrationally strong, fear-induced user backlash which is going to hamstring their new Ad Targeting AND Gifts business lines in one big mess, which means instead of these business lines pulling the company out of their stock valuatiopn doldrums it’s going to make it last a whole year long.
And all because they don’t know how to communicate with their users.
READ THE FULL POST
I believe the true cost is much higher than a year loss in gift buying. The true cost of Facebook keeping secret from its customers is a matter of boiling water with the frog in it. How long will the frog stay in before it jumps out?
Will users who made what they thought was a private transaction believe that Facebook is very protective of their trust when it becomes clear that the site has sold information about their action?
The reason why Facebook’s business model is built on shaky sand is that, Google sells advertising based on its technology; a smart algorithm that brings order to the web. Yes, they use users’ clicks to better the ranking so the ranking is improved based on users’ preference. On the other hand, Facebook’s biggest asset is users. Its content is user generated. Network effect increases the value of the network for each user as more users join the network.
However, now that Facebook’s revenue is based off of advertising, it is getting itself into a situation in serving two masters. With a goldmine of user data, Facebook faces the daily choice of pleasing the advertisers (therefore increasing revenue/profit potential and share price performance) and selling out its users. Facebook’s value as a company and its value to advertisers is contingent upon the users’ sharing, yet the ongoing changes are continuously distancing itself from long-time users, including myself.
Mark Zuckerberg has been reported in various occasions that he does not care about privacy. While there are arguments about Zuckerberg’s true stance, the thought of relying a central repository of personal data on a profit making company is by itself a shuddering thought.