Facebook – will the bubble burst?

Facebook bubbleI was having lunch last week with a friend and we were discussing social media and all its ramifications. I mentioned how important I thought it was that his company utilize Facebook as a way of creating deeper relationships with his customer base. As I prattled on about how big and pervasive Facebook is he hit me with the line – “For now, until something comes along to replace it.”

That kind of floored me. Not that this is a new idea. As Facebook crosses the 600 million threshold on its way to a billion users there is an underlying buzz that this is all well and good – until the next big social thing comes along.

After all, who thought Friendster or Myspace would ever die? In the every changing world of digital evolution you are often one shiny new toy away from obsolescence.

While I would never say never, I do think the likelihood of Facebook being usurped by an entirely new platform becomes more remote everyday. The more time we spend on Facebook, adding friends, posting pictures – the more difficult it will become to pack up and move.

To replace Facebook someone will need to develop a social media platform that is better, smarter, cooler, etc. One that solves consumers’ problems in a real, tangible and easy-to-understand way. I do not see this happening – at least in the near term.

This is not to say Facebook won’t sow the seeds of their own demise. History is littered with organizations that were not conquered but damaged themselves. Think the grand mistake of New Coke. Or IBM.

So, what could those seeds be?

Going Public – This could be the single biggest mistake Facebook ever makes. Currently, they are beholden only to themselves. We assume they are making piles of cash and turning a reasonable profit. Unfortunately, if they turn themselves over to Wall Street the entire dynamic changes. Profitability takes a back seat to growth. Making money isn’t enough. You have to make demonstrably more money every year. At some point, Facebook’s extraordinary growth will plateau – the laws of physics demand this. When that happens they will be forced to seek other ways of growth that could alter the way their system operates. This would change who they are.

Two examples of this come to mind (and I’m not even going to go down the dot-com bubble road). The radio industry became a slave to the stock market and –  even with huge margins –  they fell out of favor because they were not perceived to be a growth business. You only need to look at companies like Clear Channel or Citadel to see how going public was a disaster.

Starbucks also ran into the same problem. No one doubts their viability but once they went public they altered their growth strategy to appease the brokers. This damaged their business. Fortunately, for them, they realized their folly and have taken steps to get back on track.

Privacy – I am not in the ‘Facebook has privacy issues’ camp. Any reasonable person who spends time on the Internet – especially social media – knows they are leaving a digital trail in their wake. So, if you don’t want people to see your phone number on Facebook – don’t put it there! Duh. If you don’t want advertisers targeting you based on your interests – don’t list any. If you don’t want non-friends seeing your stuff – learn how to work the privacy controls.

That said, if Facebook – in the quest for increased revenue streams – decides to release more and more of our specific personal information to potential advertisers – there could be a significant backlash. The minute we start getting spammed outside the Facebook framework there is going to be trouble. Once we lose any control over what people outside out network see the complaints will rise.

Greed – Despite what Gordon Gekko said – greed is not good. We are already seeing Facebook get away from the simple right side box ads by integrating more and more traditional banner advertisements on our pages. This increased clutter has already changes the look and feel of our Facebook pages. So far, the hue and cry over this has been relatively muted. But, if our pages start looking like traditional websites – we have an issue.

Greed, part deux – I doubt this will ever happen but if Facebook starts charging us for any previously free services there will be a revolt.

Functionality – The Facebook platform continues to evolve. For the most part people do not like change. People adapt and the storm subsides. Facebook needs to keep an ear to their community (this is social media) and make sure they grow their platform in a way that pleases rather than shocks the users.

This is an eye of the beholder kind of concern. Every new change brings kudos along with complaints. To date, they have done a very good job of alerting us to these changes and – on many occasions – have adjusted to the feedback. They must continue to listen to their entire community – not just the developers and the big clients. The mass appeal of the platform is what has made it so indispensable.

Brand Extension – The moment Facebook decides they are more than a social media network is the moment they will begin their decline. Yes, they are creeping into geo-location with places, looking at developing Groupon style offers and tying themselves to every website on the web. These are (somewhat) natural extensions.

Be very afraid when they decide they need to tackle Google on search or iTunes on music or creating their own cell phone takes them away from what they do best. Improving functionality and features is a smart way to grow. Extending their tentacles into areas that are not part of their consumer mission dilutes what they have to offer.

I do not presume to know what Facebook’s plans are for the future. I give them the benefit of the doubt that their strategic plan takes into account their corporate culture. But – the view from inside an organization can become clouded. The insider mentality can become self-affirming and prevent honest evaluations. This happens every day in corporate America.

Facebook is the dominant social media platform. They got there by delivering a product that people love. They will stay there by continuing to deliver on that expectation.

Your thoughts?

Steve Allan, Social Media Specialist


About Steve Allan

I am a Social Media specialist uniquely focused on the management, messaging and marketing of social media platforms for non-profits and small businesses.
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3 Responses to Facebook – will the bubble burst?

  1. Pingback: Facebook – will the bubble burst? | Smthree's Blog | Midia Social

  2. Pingback: Facebook – will the bubble burst? « Big Engine Media

  3. Pingback: Is Facebook for Business Overrated

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