Facebook has trust issues

May 15, 2012
5
Facebook has trust issues

Facebook may be poised to offer its initial shares to the public following strong demand, propelling them up to a $100 billion valuation, but the company faces other challenges ahead. One of the obstacles the social networking company might come up against is monetization troubles and public distrust. A new study has shown that 57% of Facebook users would never click on ads or sponsored content.

Around 26% of users said they “hardly ever engage” with ads, and only 4% said that they regularly click ads. On top of that, users say they didn’t feel safe buying products or services through Facebook. An MSNBC poll shows that 54% of users say they didn’t feel safe buying goods or services, and only 8% indicating that they felt completely safe.

While internet users not clicking ads isn’t news, it does mean that Facebook can’t solely rely on ad income going forward, especially as it starts to push more into the mobile market. The company is trying to reduce its reliance on ads: right now 82% of Facebook’s revenue is from advertisements, down from 98% in 2009. If it starts to work commercials and ads into mobile apps, users could simply ignore them or leave the platform altogether, with only a small sliver of users clicking and generating the necessary income.

The flipside of the argument is that that small portion of users is all that Facebook needs: the service current holds around 900 million users, so even a fraction of the population clicking through on ads is sure to generate huge revenue. Facebook is looking into other ways to monetize the service despite that, recently testing a new Highlighted posts feature that would allow individuals and brands to pay a small amount of money to bump important posts.

[via CNBC]


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