This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

4 Major Facebook Growth Challenges

Keep Advertisers Happy

"[Facebook must] deliver high and measurable ROI [return on investment] to advertisers," explained Ken Sena, an analyst at Evercore Partners, noting that Google (GOOG) gained massive desktop success by ensuring that advertisers received a healthy ROI. "This needs to be the first step for Facebook."

"Facebook must also do a better job of identifying the demographics of its users in order to appeal to different advertisers," said Sica of Sica Wealth Management. "This could be accomplished by growing in applications associated with gaming and entertainment, which will also increase the amount of time users spend on the site."

Facebook's post-IPO cash haul could be used to fund acquisitions in this area, he added.

The fact that Facebook is dealing with slowing revenue growth makes the task of delivering advertiser ROI even more critical. The social networker saw its revenue slip 6% sequentially in the first three months of 2012, although sales were up 45% on the prior year's quarter.

Facebook's costs are also rising, according to a regulatory filing, increasing $110 million, or 66%, year over year.

Clearly, Facebook has its work cut out, according to Pund-IT's King.

"Facebook has obvious opportunities related to targeted advertising and mobile-enabled services but competition in those areas is fierce and the company's Byzantine user policies (which sometimes seem dedicated to stripping away what little privacy participants have left) have incited regulatory agency and user concerns," noted King, in an email. "Being an outlet for online services or retail sales seems to have potential, but that would probably have to be accomplished via partnerships with established players, as Facebook doesn't seem to have any ambitions to become a supplier."

King, however, notes that the Internet giant might decide to offer membership services and features which users would have to pay for. The analyst acknowledges, though, that changing customers from "freemium" into premium is easier said than done.

Stock quotes in this article: FB, GOOG, ZNGA 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs