GM Says Facebook Ads Don't Work, Pulls $10 Million Account
I've said this repeatedly: Facebook is a high-risk proposition, particularly as an investment (disclaimer: I work for Google). "Intent" as other commenters have noted is a big part of the story but it's not the only story.<p>Search can broadly be broken up into at least two categories:<p>1. Navigational eg typing "b and h" into the browser; and<p>2. Informational eg "cheap flights to jamaica".<p>I don't know what the make up is of (1) vs (2) but I expect for normal users (1) is pretty huge. I would guess that ads are have lower clickthroughs for (1) than (2).<p>(2) is where you have the intent. The user obviously wants something. They may find it with an ad. They may find it with organic search results. Either way, the goal with search is to get the user the best result.<p>With Facebook you tend to be just looking at friends' updates, posting your own updates, posting photos and the like. You don't go to Facebook to find things. So it doesn't really matter how much targeting information Facebook has if you don't have that intent.<p>Many will say "but what if you do start going to Facebook to find things". That's a <i>massive</i> "what if". What if the Sun expands tomorrow and swallows the Earth?<p>Facebook has (IMHO) a number of strategic problems:<p>1. It has no control over mobile. Both Google and Apple have mobile OSs;<p>2. It has no search engine (which is how it could monetize its user information); and<p>3. Users of community-driven sites are notoriously fickle. There is <i>nothing</i> preventing Facebook from being the next Myspace when something newer, cooler and hipper comes along and the users move on.<p>Early founders, employees and investors have obviously done <i>spectacularly</i> well and there's a lot that Facebook has done right (all the more surprising considering the length of time and the age of Zuckerberg). It's also created an engineering environment that attracts and maintains top talent (although we'll see if that last once the stock plateaus, which is simply a matter of time). But would I be buying in the IPO? Not a chance in hell.<p>This isn't about predicting imminent doom. Facebook will be around for years to come. It's about the upside reward vs the downside risk. Facebook somehow is still considered a "growth" company and values as such (with extraordinary P/Es). This will at some point change (as it did for Google some ~5 years ago).