Now I’m not sure if the ex England football manager, Graham Taylor is an avid Facebook user or not, but one thing’s for sure, the ubiquitous social networking site would not have allowed for the beleaguered football manager to vent his frustrations in the build up to a Poland goal against England in the 1994 Euro qualifiers, when he uttered the phrase that has forever lived with him and found its way into football folklore: ‘Do I not like that’.
On Facebook you can only ‘like’. You can’t ‘dislike’ or, indeed ‘not like’. Interesting. You could say this makes for a very positive environment; you only get to see the things people like. There is no place for any negative mouse clicks (OK, you can ‘unlike’ if you like).
However, as social media has, itself, proved a number of times, if the ‘public’ really doesn’t like something, they’ll let you know about it one way or another.
This is something Facebook is currently experiencing, following its floatation on the New York stock exchange. Since its shares launched last Friday at $38 (£24) a share, and after briefly peaking at just over $42, they quickly fell back to $32 each.
Now the fallout and recriminations have begun. It’s widely reported that Facebook, Mark Zuckerberg and the banks leading the floatation, including Morgan Stanley, now face lawsuits from disgruntled investors, who claim that revised forecasts of Facebook’s future earnings potential were not disclosed in the lead up to the float. Doubtless the lawyers will be happy.
The problem seems to be that last year Facebook only made $1 billion. Its share price at last week’s launch valued the business northwards of $100 billion. Normally company valuations are based on a rough calculation of how many years it will take the business to earn that amount. As things stand, Facebook would take 100 years to realise its valuation. You don’t need me to tell you that this doesn’t sound great. However, with technology companies, such as Facebook, it’s not that straightforward, because investors will also factor in the likely growth of the company over the next few years.
In Facebook’s case, it appears the company has recently downgraded its own forecast for this growth, because of a subtle change in the behaviour of its users. That is a noticeable trend to visiting Facebook from their smartphones rather than on a desktop computer. So what?
So, smart phones have a smaller screen. So, there is less room to display information. So, while you are updating your Facebook page, there isn’t room to display an advert next to it.
Of course Facebook could arrange it in such a way that adverts appear across the whole screen, forcing users to ‘click through’ the advert before they get to their Facebook page. Or they could have them popping up randomly while you are on the site. But, and it’s a big but, this might get very annoying for users. And Facebook doesn’t want to annoy its users.
They have a problem. If Facebook is unable to display adverts on smartphones, or this advertising is limited, and smartphones become a growing mode of viewing for visitors to the site, how do they grow their revenue? Or how do they grow it fast enough to justify the $100 billion price tag?
Hence, the revised forecast.
Unlike football teams, businesses cannot count on unconditional loyalty from their ‘customers’, even businesses as (currently) popular as Facebook. Facebook’s popularity is built on the service it offers to its users. This is not exactly the same service that the company wants to be able to offer in order to increase its revenues.
Facebook as it is now will not be how it is in five years’ time. The Internet, technology and competition moves too quickly for that. In any case, even without these drivers, Facebook's need to increase its revenue will inevitably lead to change. Facebook may become more popular, less popular, more valuable or even no longer here. Surely not?
Why not? What if Facebook users find a different social media platform they like better? What if they simply get bored with it? What if advertisers start getting an adverse reaction to their ads?
The only thing for certain is that things will change. Facebook, like any business, needs to react to this changing landscape, adapt to it and give customers what they want, when they want it, in the way they want it.
And as the England team get ready to jet off to (ironically) Poland for this year’s Euros, will they give us what we want?
Now we really would like that.