Facebook Inc (NASDAQ:FB)’s falling stock and bungled IPO are no secret on Wall Street these days. In what has been termed as the “worst IPO of the decade”, Facebook investors lost millions.
Since that time, the stock has continued to fall in price, and now trades in the low $20 range. Its initial offering price was $38 per share, and it hit it’s all time high on the day of the IPO, at $45 per share.
After a dismal 1st quarter earnings report, which left investors licking their wounds, and waiting for the lock down period to end, so they could unload their stock, the company is scrambling for ways to boost revenue. Their latest attempt to boost earnings, and try to gain back the respect of investors, has been met with mixed emotion.
Facebook announced an advertising program today, which is more than just a little aggressive. The plan will allow users who have Pages in Facebook Inc (NASDAQ:FB), to purchase the ability to show their Page to non subscribers. Up until now, the only people who received news from your Page, are people in your friends list, and people who subscribed to your Page. The only other way of advertising to consistories, was through sidebar ads, or Sponsored Stories.
According to TechCrunch, the program is part of a very small test, and is assumed to only be available to a handful of businesses, which will display the ads to a very small number of users. In regards to the program, Facebook had this to say.
“We want to be thoughtful about how we introduce ads in news feed, so we have limits in place to ensure that peoples’ news feeds are not filled with advertising, but we don’t have specific numbers to share.”
This will prove to be an effective way to reach thousands of possible clients. However, the downside is for businesses who have spent thousands of dollars building a fan base. These advertisers will not be very happy if a new business can reach the same number of clients as they can, without spending the money they have over the years, since Facebook became recognized as a valuable way to market your company.
Another major downside is the fact that many users will not like their feed being speckled with advertisements from pages they have not subscribed to. There are many people, especially in my own family, who have refrained from liking, even some of my pages, in order to avoid ads popping up in their feed.
The truth is, this tactic shows that Facebook is desperate to prove to investors that it can earn a profit. Until today, your news feed only displayed stories about your friends, Pages and public figures you subscribed to and liked, or Pages you chose to allow to advertise in your feed. However, all of that may very well change. I for one completely “Unlike” this plan for advertising.