Why Wall Street unfriended Facebook – The Globe and Mail: “Welcome to the tech industry’s summer of sober second-thought. For an unusually large number of Web and social media darlings, these past few months have been a harsh lesson in how quickly the stock market can turn nasty.”
(Via. The Globe and Mail)
Repeat after me: Ads cannot fund giant companies indefinitely. Eventually, the advertisers always figure out that their ad buys are essentially worthless, and they all pull out, rendering the service unsustainable. They move on to the next big unsustainable idea.
You can tell this is about to happen whenever web sites start pushing more and more intrusive ads into your face. It’s blatant desperation.
We’ve seen this before; we’ll probably see it many more times in the coming decades.
The only surprise here is that someone as smart as Zuckerberg hasn’t found more value in all that other data he has. If ads are the most creative thing he can come up with for funding Facebook, the company isn’t going to have a bright future. He should be playing way past this by now.
As suggested by this article, ads don’t even make much sense within the context of Facebook. Zuckerberg designed the entire experience around staying within the walls of Facebook 24/7. Ads, by default, are effective only if they let you leave the site you’re on and go to the advertiser’s page.
And Twitter, just getting into the ad game now? You’re about three years too late.
Wall Street is going to be more harsh this time around, because so many investors got seriously burned by tech during the dot com craze. There’s a lot of bad blood still flowing over that fiasco. Which is why tech companies that actually have a solid future like Apple trade way below what they should.
A Facebook stumble, followed by a hard Twitter fall, may depress the entire tech sector for several years, even if we don’t have a large-scale crash like before.
