Recently, Facebook achieved one of its most significant milestones since its launch in 2004 when the company’s CEO Mark Zuckerberg announced that the social network reached one billion users on September 14th. For Facebook, attaining a user base that consists of 1/7 of the world’s entire population is a major accomplishment. However, many of the small businesses which utilize Facebook as an online marketing and advertising outlet are still skeptical of the network’s ability to enhance their revenues despite having the most massive user base on the Web.
Small business owners are not the only ones concerned with Facebook’s performance as an ad revenue-driven organization. The company’s stock value remains unimpressive and many investors are reluctant to add Facebook to their portfolios, regardless of the brand’s ever-increasing visibility. While the announcement has undoubtedly granted the world’s largest social network substantial bragging rights, it has seemingly done little to really enhance the company or its profitability.
However, a more interesting statistic has also been revealed by Facebook as of late that may prove beneficial to their brand. As of April 2012, the network’s monthly user growth had fallen to 1.74%, the lowest it has been since its 2004 debut. Today, Facebook claims it has reached 2.04% monthly growth. This marks the first increase the network has seen in over 13 months and could help to restore investor confidence in the brand going forward.
Although it is critical for Facebook to increase their viability to investors and improve their company’s waning stock values, it is just as important to build consumer confidence. As a business driven almost entirely by advertising revenue, Facebook must take greater measures to attract advertisers, particularly small to mid-sized businesses which account for a large percentage of online advertising revenue.
Facebook’s audience is clearly larger than ever before and maintains the greatest potential as an advertising and marketing platform; but the company should begin to investigate other revenue streams in order to grow from a fiscal perspective.
E-Commerce is the most likely route and could put Facebook in direct competition with online retailer, Amazon. The development of a “Facebook Store” could position the company as a formidable competitor and drive up share prices, while simultaneously making Facebook more attractive to advertisers. Additions of features such as the “Promote” button and the soon-to-be-released “Want” button are definitely steps in the right direction, but a more comprehensive strategy may be necessary.
For now, Facebook’s popularity may be unparalleled, but its profitability is minimal at best. Business owners have yet to see any discernable benefits from the network’s growth to upwards of 1 billion users and an investment in long-term revenue enhancement should be considered an essential component of Facebook’s business model. If the network is able to successfully expand its offerings beyond its current capabilities, the future of Facebook will not only be secure, but beneficial to small business owners, as well.