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Why Facebook Fizzled

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by Howard Baldwin

Why Facebook Fizzled
Photo courtesy Howard Baldwin

I owe Facebook CEO Mark Zuckerberg an apology because I couldn’t get my buy order in early enough on his company’s IPO. I’m pretty sure that if I had had time to make a purchase, the stock wouldn’t have sat there like a dead fish on its opening day. Or not.

I’m actually not surprised, since last week turned out to be “bash Facebook” week. First General Motors pulled its advertising on Facebook, claiming it “didn’t work.” Then a survey revealed that about 96% of Facebook users surveyed hated the new Timeline feature. Facebook unveiled it anyway, leading to accusations that the social networking site ignored its users. Then, just to pile on, Byte magazine recommended that businesses stay off Facebook.

In contrast, I’ve gone on record as saying I love Facebook, and I still do. Try planning a class reunion without it. But I have also spent the majority of my life in Silicon Valley, watching people who were neither smarter nor more handsome nor more charming than me make millions only because they were at the right company at the right time. The valley is flooded with people rich enough to buy Maseratis and Lamborghinis, but not smart enough to make sure these cars had turn signals installed. They clearly haven’t, because I never see them blinking.

So I understand the impulse to lash out at a 28-year-old gazillionaire like Zuckerberg – who still looks young enough to be on the verge of dropping out of Harvard – provoked by any number of the seven deadly sins and the knowledge that, even with the Facebook IPO fizzling, he’ll still be able to buy all of Fiji and parts of Tonga besides.

So what happened? Let’s go back to General Motors and its decision to pull its advertising. Now, I don’t want to hold up GM as a paragon of corporate thinking, based on some of its previous decisions I’ve written about, but in the interests of fairness, I started looking at some of the ads that popped up on my Facebook page this past week.

Understanding how online advertising works on Facebook – or Google, or anywhere else on the Internet – isn’t really that difficult. You post information about yourself, Facebook’s wickedly smart algorithms analyze the information, and then suggest ads appropriate for your page. This is how it’s supposed to work, anyway.

For instance, I have “liked” (in Facebook parlance) DirecTV. (Don’t believe the FUD that cable companies spew about satellite – it’s highly reliable.) In actuality, you have to really love something to go on record as saying you like a corporation, not only because it makes you look like a capitalist lackey, but also because said corporation will start hitting your page with insipid posts about shows for which you are not the target demographic. [insert graphic] So what ad does Facebook post? One for DishTV, a DirecTV competitor.

Let’s take an even simpler example. Facebook allows you to post your birthday and your relationship status, assuming you want to reveal that much information to the world. My profile clearly states how old I am and that I am married. It will be 20 years this week, in fact, and I will give up DirecTV before I give her up. So what ads does Facebook post? Second Chance at Love and Meet Older Women. [insert graphic #2] This makes me wonder how smart the algorithm really is. Why would I be looking for a second chance at love? Or does the algorithm really understand that most married men (myself excluded) are looking for side dishes to snack on? In that case, it may be really, really smart.

Still, I’m beginning to wonder if Facebook’s ad-selection algorithms do need a little tuning, and that maybe Zuckerberg shouldn’t have dropped out of his Harvard computer science classes so soon.




Tags: boomers facebook ipo advertising relationships

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