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.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV