Facebook's public offering will be the largest and perhaps most highly anticipated Internet deal in history. But faced with great expectations, Facebook is staring down some unnerving obstacles when it comes to key areas of monetization and growth: public distrust and display advertising apathy.
According to a new AP-CNBC poll, 57% of Facebook users say they never click ads or other sponsored content when they use the site, with another 26% saying they hardly ever engage in such activity.
While the company makes money, in part, simply by displaying sponsored content, user clicks are a critical part of an advertiser's calculus when gauging how effective those ads are and how much they're willing to pay for them. In the first quarter, Facebook generated 82% of its $1.06 billion in revenue from advertising sales. In the company's online IPO pitch to retail investors, the CFO says the company is working to make ads more relevant, more social, and more engaging as it looks to grow.
And while Facebook has been able to decrease its reliance on sponsored content (down from 98% of sales in 2009), the hopes of expanding the company's e-commerce footprint also faces public resistance, the poll shows. A majority of participants (54%) said they wouldn't feel safe using the platform for financial transactions like purchasing goods or services. Only 8% said they would feel extremely or very safe in doing so.
While Facebook currently has a limited market for real goods and services (most financial transactions are done for virtual goods and games), analysts cite e-commerce as an extremely lucrative, and untapped, market for the platform — and one that could be vital for the company's future growth.
The public also remains wary of Facebook's valuation, widely bandied about as $100 billion, with just 3% of respondents saying they thought the company would be undervalued at such a number — half said they thought it would be overvalued (that view rises to 62% among active investors). Views are also split on whether not shares of Facebook stock would make a good investment — with progressively less positive opinions for older age groups.
The youngest respondents (age 35 and under) were most likely to say Facebook would be a good investment (59% said yes), followed by baby-boomers and Generation X-ers (55% and roughly 50% respectively), followed by seniors (only 39%).
As for the Facebook CEO: The wunderkind CEO who turned 28 on Monday inspires somewhat tepid confidence as a leader, with only 18% of respondents saying they were extremely or very confident in his ability to run a large publically traded company like Facebook. Yet, pinning down a specific reason was difficult for respondents who neither cited his age, temperament, nor reputation as significantly affecting those abilities.
Facebook users have consistently cast a wary and suspicious eye on the platform: 59% of respondents said that they had little to no trust in Facebook to keep their information private. Yet despite those ongoing concerns, the number of users (and their engagement) continues to increase. Facebook has grown to 901 million monthly active users worldwide, with personal computer users spending 6-7 hours per month on the site (compared to just 3 minutes for Google+ users), according to recent data from ComScore.
But charting a future course may prove more difficult than meets the eye for the company, according to the poll. And navigating that landscape under the daily pressures of a public company could prove even more difficult.
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