Facebook (FB) Caught Between Rock and Hard Place Over Ad Sales
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Facebook (Nasdaq: FB) shares cratered immediately following the company's May 2012 IPO, but recently they have partially recovered losses, gaining 25 percent in just 30 days. The concern, from the point of view of investors, is over Facebook's ability to monetize consumers shift to mobile.
In response to critics, Facebook recently announced a new plan that allows advertiser to target Facebook users on offsite websites. Investors have made note of the potential this new ad network can create for Facebook in light of the social networking company's ability harness personal data that would allow advertisers the ability to target specific users.
While this is may be good news for investors, it is not, from the point of view of privacy advocates, good for Facebook users. As a result, CEO Zuckerburg finds himself between a rock and a hard place with his efforts to appease both investors and concerned users, which appears to be an impossible task considering the conflicting interests.
The conflict can be summed up by Facebook's Director of Advertising, Gokul Rajaram, recent comments about the new program. "We have been working to make it easier for marketers to reach the right people at the right time and place . . . in a way that respects user privacy."
This is, of course, easier said than done, since by nature the efforts oppose one another.
In the end, Facebook's promises to respect user privacy may prove to be lip service. If so investors emboldened by Facebook's latest efforts to generate revenue will soon begin to ask themselves the following question – how much can Facebook get away with? Facebook's young CEO is probably asking himself that same question. One way or another, he may soon find he has very little breathing room.
In response to critics, Facebook recently announced a new plan that allows advertiser to target Facebook users on offsite websites. Investors have made note of the potential this new ad network can create for Facebook in light of the social networking company's ability harness personal data that would allow advertisers the ability to target specific users.
While this is may be good news for investors, it is not, from the point of view of privacy advocates, good for Facebook users. As a result, CEO Zuckerburg finds himself between a rock and a hard place with his efforts to appease both investors and concerned users, which appears to be an impossible task considering the conflicting interests.
The conflict can be summed up by Facebook's Director of Advertising, Gokul Rajaram, recent comments about the new program. "We have been working to make it easier for marketers to reach the right people at the right time and place . . . in a way that respects user privacy."
This is, of course, easier said than done, since by nature the efforts oppose one another.
In the end, Facebook's promises to respect user privacy may prove to be lip service. If so investors emboldened by Facebook's latest efforts to generate revenue will soon begin to ask themselves the following question – how much can Facebook get away with? Facebook's young CEO is probably asking himself that same question. One way or another, he may soon find he has very little breathing room.
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