While Facebook’s stock price continues to decline, they still can rely on the NYTimes to provide encouraging news. Consider.
Still, some investors remain bullish. Facebook is profitable, it keeps its nearly one billion users glued to their screens longer than any other Internet site, and it is aggressively experimenting with new ways to drum up advertising — its main source of revenue. Just this month, for instance, it began offering application developers a way to focus ads, and sought to diversify revenue by opening its site in Britain to online gambling.
Of course, there are some concerns.
In May, when investors tripped over themselves to buy a piece of Facebook, not even the skeptics predicted what has happened. Three months after the offering, shares have lost more than 40 percent of their value, closing at just under $21.81 on Friday, from $38 on May 18.
Hey, I advised staying away from the IPO and then suggested $15 as a good price to buy Facebook. I certainly wasn’t the only skeptic or the only one to express my doubts. Only a true believer at the Times could write that sentence and still appear earnest. It was all smoke and mirrors with no persuasion in the lead up to the IPO and the Times is trapped in the smoke and mirrors.
But then so is Sheryl Sandberg, Facebook’s COO. She’s still believing in the persuasion of Sponsored Stories on Facebook.
After the earnings report, Facebook executives said their experiments in increasing revenue were bearing fruit. The chief operating officer, Sheryl Sandberg, said in the analysts’ call that Sponsored Stories, a form of Facebook advertising, was bringing in $1 million every day, half of which came from mobile users. Sponsored Stories turn a Facebook user’s “like” of a brand page into brand endorsements to his or her friends.
Good news, right? Keep reading.
But Sponsored Stories are also the subject of a federal class-action suit in California. A pending settlement could be costly.
Oh. So Facebook is running a persuasion play that may be illegal and cost them a large chunk of money. Tell me what kind of persuasion maven achieves maven status with illegal Box and Play?
Maybe Sandberg can pull another rabbit from her hat with that Facebook organ donor persuasion play? You remember. Sandburg was at a college reunion party and heard the lament of a surgeon classmate about the problem of organ donation. She told him that Facebook could change that. And, of course, we know that now no one in the US dies waiting for an organ transplant today because of this Facebook play.
But, wait. There’s more. Sandberg’s persuasion genius not only includes illegal plays that grab your Likes and bundles them into those classy ads on the side of the screen and unmeasured Change in organ donation that saves lives they cannot Count, it also demonstrates this stunning mastery of the history of advertising in TV.
Ms. Sandberg said it would take more time for marketers to figure out Facebook. “It took a long time for the TV market for advertising to be understood,” she told analysts. “We are still in the learning curve.”
TV advertising strategy flowed directly out of radio advertising and newspaper advertising. TV broadcasters quickly learned how to position ads for effect shortly after TVs became household items. Any delay in the effectiveness of TV advertising was not from a “learning curve” but from the diffusion of TV sets into American households.
As COO, Sandberg plays a major role in the strategic direction of Facebook and in the day-in tactical maneuvering. She knows nothing about persuasion and thinks that ripping off client Likes to invent Norm and Comparison web ads is good theory, research, and practice. She believes that a slot on a Facebook profile for organ donor status will deliver organs to people who need them without having to do anything to Count the Change. And, she apparently never read a book about the history of advertising.
All the smart persuasion boys and girls made their killing with Facebook before the IPO and sold on the first day or earlier on the secondary market. That was the only persuasion with Facebook, selling early. They left everyone else holding a bunch of tins cans with string and are now living on an island they recently purchased somewhere in the Pacific. They persuaded everyone with no smoke and mirrors because everyone else still believes in Facebook. Remember the Rule.
There’s A Difference Between Smoke and Mirrors, and Persuasion; with Persuasion The Illusion Lingers.
P.S. You can make small beer on FB by shorting the stock, maybe down to $15. Do your due diligence as with Benjamin Graham and Intelligent Investing to figure it out. Or, you could wait for the biotech boys and girls to make a quantum computer. That will be a killing. Or maybe This Time For Sure with Genomic Medicine!
P.P.S. Why isn’t someone playing the Global Warming angle with a tech company? Sure, Al Gore is selling the Nest, but I’m talking something really big, like carbon sinks or some other exotic whizbangery that can’t possibly work, but looks so good it must be true. If Romney wins the election all the progressives will be easy pickings for a stock that cures global warming!
P.P.P.S. Feeling better (YouTube) with Monty Python, of course. “Bring out your dead. Bring out your dead.”