Facebook IPO stuggling analysis

3:52 PM, Jun 7, 2012   |    comments
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St. Louis, MO (KSDK) - Facebook has taken a drubbing from Wall Street and the media since last month's IPO launch.

Facebook's stock price suffered a 30 percent drop in the weeks after the initial public offering. The big knock on Facebook is that critics doubt the company's advertising strategy will work.

Adam Kreitman, who runs a company called Words That Click, advises companies about their online marketing campaigns.

"Most companies sell products or services that help people solve problems," Kreitman said. "But when you have an entity like Facebook where people are going there to avoid their problems, that makes it challenging for marketing companies...or for companies to market effectively."

Facebook depends on ad revenue, but according to a survey of a thousand people this week by Reuters, four out of five Facebook users have never bought a product because of advertising or comments on the website.

"You're going to have a tough time selling something directly to people on Facebook," Kreitman said. "But you can engage with them there and start the conversation. And if you do that and get them to your website or on an email list, then down the road, you're going to have better success marketing to them."

Kreitman points out that the Reuters survey indicates 20 percent of Facebook users do buy products they see on the website, and 20 percent of 900 million users is a sizeable audience. Whether Facebook can take advantage of its global brand and customer base approaching a billion people will be fascinating to watch.


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