Facebook Advertising and "Promote" Scam is a Total Failure! Judge For Yourself!

I love Karl Denninger. I don't always agree with him but I like his "Take no prisoners" attitude. Today he points out something that I've been complaining about for a long time: Facebook's scams and failure in advertising.

Please refer to: Market Ticker's Facebook's "Promote" Blows Up In Their Own Face?


There's a meme that has been flying around for a while since Facebook introduced the "promote" feature (where you can pay to cause your postings to show up on people's consolidated timelines -- and if you don't, most of the time they won't) that I'd like to address:

Many of us managing Facebook fan pages have noticed something strange over the last year: how our reach has gotten increasingly ineffective. How the messages we post seem to get fewer clicks, how each message is seen by only a fraction of our total “fans.”
It’s no conspiracy. Facebook acknowledged it as recently as last week: messages now reach, on average, just 15 percent of an account’s fans. In a wonderful coincidence, Facebook has rolled out a solution for this problem: Pay them for better access.
As their advertising head, Gokul Rajaram, explained, if you want to speak to the other 80 to 85 percent of people who signed up to hear from you, “sponsoring posts is important.”

What, did you think that you were going to get something for free forever?
Well, no.

But here's the problem -- Facebook apparently can't make any money (so their results show) without trying to ding you on both sides.  In other words not only do they insist that a person with a page pay to reach most of the people who "like" them, they also then spam the users who like the page with their own advertising.

This is tantamount to an admission that their advertising model is a failure.

Yep. FAILURE! There's nothing much that I can add to this. I've written many times about how much I dislike Facebook's business model and how I think mobile advertising is a failure... Recently I've been grousing - on Facebook no less - about how my older posts would get 70, 80, 100, 150 likes... Now? They only get 5 or 6? How did that happen? 

Well, it's obvious isn't it? They see that I was getting many hits and shares so they decided to cut my access in the hopes that I'd buy in to their "promote" scam. 

Well, I don't.

I've also noticed that people coming to my site from seeing a link from Facebook has dropped off a cliff while Twitter is still there. Facebook launched their "promote" scam in May. The results six months later are a disaster. Evidence? See for yourself:

The traffic to my blog over these last six months from May ~ Dec. 2012. Facebook that used to rank with Twitter has dropped off a cliff. It's obvious why.

You know what they say? The proof is is in pudding.

Facebook is a marketing, advertising and strategic planning failure.

Read more at the Market Ticker: Facebook's "Promote" Blows Up In Their Own Face?

Facebook Shares Plunge After Lock-up Expires

UPDATE AT BOTTOM:

Today, employees of Facebook were allowed to sell their stock after the initial Lock-up period expired on Monday. The Stock markets were closed on Monday and tuesday due to Typhoon Sandy and opened up today, Wednesday, 10/31/12 USA time.

Facebook shares lost $0.83 cents per share.

The Free Dictionary explains what a "Lock-up period" is:

A time during which a publicly-traded company forbids management and large stockholders to sell their shares, usually following an initial public offering. Depending on the company, the lockup period may be 90 to 180 days. It exists to ensure that the market is not flooded with shares in the company at any given time, which would increase supply and cause a drop in price. Large shareholders selling their shares may also be seen as an indication of a lack of confidence in the company, triggering a panic sell. After the lockup period ends, however, shareholders may sell without restriction.

Today, 234 million shares became available. In two weeks another 777 million will be available. Yahoo Finance explains:

A lock-up period that had prevented such sales expired on Monday. U.S. stock markets opened on Wednesday for the first time since Superstorm Sandy hit the East Coast, so that's when employees could start selling.

In all, 234 million additional shares and stock options held by employees as of Oct. 15 became eligible to flood the market. CEO Mark Zuckerberg is not selling. He has already said that he won't be selling stock until at least next September.

The next lock-up expiration comes on Nov. 14, when 777 million shares and stock options will become eligible to be sold.

Facebook Inc.'s stock fell 83 cents, or 3.8 percent, to close at $21.11 Wednesday. The stock is down 44 percent from its IPO price of $38.

Facebook is down more than 44.8% from it's IPO price. With this massive load of shares becoming available, I'm looking for Facebook stock to be under $15 dollars by end December 2013... 

My predictions for Groupon, while grim, were too optimistic. I said in Groupon Stock Holders! Head For The Exits! would be under $5 by end December, but I want to lower that to under $4. 

Update: Janet Tavakoli at Huffington Post writes in "Facebook Stock: New Strong Sell Signals":

After trading hours on Friday, October 26, several senior Facebook officers made required filings of 4s forms to the SEC reporting that on October 25, they converted their newly unlocked restricted shares from  Class B common shares, which get ten votes, to Class A common shares which only get one vote.  Unlike the Class B shares, the Class A shares can be traded in the public market.  In fact, the only reason to give up the ten times voting rich Class B shares for Class A shares is to ready yourself to sell the shares, since Facebook offers no economic value when the exchange is made.  In other words, as soon as their shares were unlocked, Facebook's officers got them ready for sale in the open market.

Like I wrote above, "Facebook stock to be under $15 dollars by end December 2013." Of course I don't know the exact timeline but, after that, look for Facebook to go the way of Myspace: Zero within a few years.