Facebook: A Disaster for Businesses

Facebook 's stock is down over 70% from the time it announced its name change to a word that means "death," "dead" or "she died" for about 400 million people living in North Africa, The Middle East, and Arabian Peninsula who also Facebook customers. But this post is not about the sad its decline in its stock price, it's about the bullshit that Facebook was selling and the overwhelming support it got from its buyers for years. It's about their business model. And, yes, it's Facebook, just like it will always be West Paterson and if you're from Northern NJ you know what I'm talking about.

The universe in which my colleagues and I at Verasoni operate is small in comparison to Facebook, though in or about 2010-2011 when Facebook started throttling organic content on business pages, we called BS, and we called it in an outsized manner. We warned our clients and anyone who would listen against investing in social in the way that luminaries on TV and on conference stages were advising. Not many people listened, the shinny object was too tempting and hypnotic. Of course, our warning came against our firm's best interest, but it was and continues to be the right thing for our clients. Our clients know exactly what I'm talking about, and we have not waivered nor will we until we see evidence from digital media otherwise (this is a digital media issue overall, and not simply Facebook).

We were on early to Facebook's "valueless proposition," earlier than our clients and the market were ready to hear which made for some uncomfortable conversations. At conferences, I presented data and got polite atta-boy from many but most businesses stayed the course, investing heavily in the platform citing analytics but driven by FOMO. At the same time, I would receive private calls from frustrated CMOs who got "some cool analytics" but were concerned about ROI, while at the same time they were happy to show their boards and CEO analytics because "they like to see that stuff." They didn't understand it, but they like to see it. And, they were on Facebook, they did Facebook and a lot of it was free...like it's free to pay a digital agency, free to hire an entire team in-house, that sort of free. For 10 years, we were met with skepticism if not outright dismissed when for example we presented data illustrating Facebook allowing business' organic posts to be seen by only 2% of a business' network, so if you have 1000 people on your page, that's 20 people...and engagement? Well, that's about 1/2 percent of the 20, so that's like a 1/2 person. Really? I wrote about that here in 2019. We also warned about the black box of Facebook advertising...yeah, it delivered "analytics" too but whom did it deliver? Where and how was money spent? We could never figure out where client dollars were being spent, more importantly, and we'll get to this in more detail in a bit, many CMOs know this, yet willingly went along for the ride because their boards and CEOs were demanding Facebook performance.

Industries, including "Big Marketing" sold the heck out of Facebook to its clients because they get paid on volume of dollars spent...same issue for Google. Corporations beefed up their social media teams, with a heavy emphasis on Facebook, Insta, and oh boy you're reading the hype about TikTok like it's a magic fountain where in a simple turn customers, sales and revenue pour out like water.

Social media has an important role to play in marketing communications, but it needs to be used as part of a managed strategy and portfolio that deliver relevancy and purpose for the enterprise, not likes. Many businesses absolutely should be on Facebook others not so much, but the level of time and investment should be different for different industries. For example, who wouldn't like Dunkin' for a free cup of coffee? Who wouldn't follow the National Basketball Association (NBA) if you're a fan and spend time on Facebook? But if you're a dentist or proctologist, what should your investment in the platform be relative to your ROI? If you're a bank, what are realistic expectations about ROI - and ROI can be more defined - for example, growing checking accounts or your brand or both?

Businesses would do well to detox from Facebook's sugar highs...they would do well to look at the macro marketing environment where creativity will play a more relevant role as things like the cookie are on their way out. More importantly, digital marketers who are in the business of selling this stuff and marketing leaders need to look in the mirror and have the courage to challenge each other. No one challenged Facebook on its bullshit in a meaningful way...no one...except our boutique firm and people who are much more eloquent and experienced than I, people like Bob Hoffman and Dr. Augustine Fou .

Google is another one...talk to your digital agencies about Google spend and while you're doing that, I will write the next piece specifically about Google.