Monday, April 15, 2013

Facebook's Flawed Business Model

The most valuable commodity in the world is attention.

Yet, despite it's substantial and active reach, Facebook appears puzzled about how to create value as a company.

The recent introduction of Facebook "Home" demonstrates their conundrum.

To extend its already substantial reach, the company is employing an Android app that essentially places Facebook on the normal introductory screen of certain smartphones.

The whole idea is to have the face of Facebook right there on the front of your phone. The benefit to consumers, of course, is that the faces they really want to see are those of their friends.

The company has employed a series of commercials to introduce this new service. One shows a Facebook employee ignoring a Zuckerberg shop talk to view mayhem from his friends on his phone.

A second features an airplane passenger ignoring a steward's instructions to put the phone away for take-off so he can see the latest flights of fancy on his phone.

And, a third tells the story of young woman ignoring family members at dinner as she covertly keeps up with her friends.

So, one might ask, just what is the desired response to this advertising? Are we to understand that Facebook is an addiction? Are users so consumed that they cannot be troubled with the everyday expectations of their immediate circumstances?

This may be the truth of it. And, this truth points to the reason why Facebook is encountering difficulties "monetizing" it service.

The flaw is the "addiction" concept the company is employing for its "business model." For the users portrayed in these commercials, the addiction is to their friends, not to Facebook, importantly not to the advertising content Facebook would so dearly like its users to notice.

Wall Street analysts often scrutinize national advertising for clues about business acumen. It is an important window into business decision-making, leadership and vision.

Copyright © 2013 by John Eighmey. All Rights Reserved.