Most users distrust Facebook: Poll

Months ago when many media experts blamed the US Government for forcing Facebook to trade publicly; no one would have imagined the truths which will be rolled out of the closet once Facebook approaches towards its IPO (this Friday).

The truths which once again prove that there is much difference between valuations arrived at in a privately traded market and a publicly traded market. Only when a company arrives at a publicly traded market, its true worth starts to unfold.

That said, according to a new AP-CNBC poll, A majority of participants (54 percent) said they wouldn’t feel safe using the platform for financial transactions like purchasing goods or services.

A 57 percent of Facebook users say they never click ads or other sponsored content when they use the site, with another 26 percent saying they hardly ever engage in such activity.

Only 4 percent of users say they often click on ads -- results that are only slightly better than the 2-3 percent clickthrough rate some experts consider the benchmark for effective banner ads.

The above numbers are important for Facebook as 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. Equally important is the money the advertiser is willing for those ads.

In the first quarter, Facebook generated 82 percent of its $1.06 billion in revenue from advertising sales, and in its online IPO pitch to retail investors, the company said that it is working to make ads “more relevant, more social, and more engaging” as it looks to grow.

But data shows that while Facebook has been able to decrease its reliance on sponsored content (down from 98 percent of sales in 2009), the Social Network still has to bring the common user to its revenue mix.
One important area which Facebook wants to tap is the e-commerce on its platform. But compared to many smaller players in Japan and elsewhere, Facebook couldn’t able to make its ‘virtual Facebook credit economy to buy virtual Goods’ success.

It’s important to note that when a majority of Facebook users (54 percent) say that they wouldn’t feel safe using the platform for financial transactions like purchasing goods or services; that directly affects Facebook’s desire to tap e-commerce on its platform. If a Facebook user won’t trust the Social Giant to use his/her credit card, how will e-commerce succeed; after all real money is used to earn virtual Credits.

Another thing which needs to be noted here is that Facebook has not helped itself with gaining User trust either. The Social network is used to employ shady and deceptive methods to land at the user data, thereby putting a big dent on its trust reputation. I think Facebook did this to help its Advertisers, who needed that curated content to make their sponsored content effective. Call it a double edged sword, but now when Facebook is trying to increase its reliance on the revenue from millions of Facebook users (901 million active users at present) whose engagement metric is always on an increase ( with personal computer users spending 6-7 hours per month on the site compared to just 3 minutes for Google+ users), majority of the users do not trust it.

Last week, the site disclosed additional information about how it captures and utilizes data from users. But it is too early to see how much the action increases the user trust.

This became amply clear when only 8 percent of Facebook users said they would feel extremely or very safe using the platform for financial transactions like purchasing goods or services.

This distrust is linked to Facebook CEO Zukerberg, 28, as well.

People may be fascinated by this wonder kid who became a billionaire when many of his age are studying. But it appears the world is not sure of his honesty (or integrity). This they don’t say openly, but deep inside an assertion of this sort lurks.

The poll we are talking of today, sees somewhat tepid confidence in Zukerberg as a leader, with only 18 percent 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. I think it has to do with shallowness in character (integrity-wise) many see in Zukerberg. But since this attribute itself is quite intangible compared to the guy’s talent and initiative, hence they are unable to say it clearly. Here, it can be said that a guy seen as one with great integrity and resolve (honesty-wise) taking over as Facebook CEO will help the company greatly.

When it comes to money people take into account factors beyond talent and initiative: Earlier everyone, especially those who haven’t thought of Facebook as a company which can make a loss; saw the Social network as a platform founded by a whizkid and run by geeks, who can remain awake all night to roll out a cool feature. But now when money has come into picture, the same people are seeing Facebook from money pov.

And when people talk of money, they talk of many other non-money things.

You agree or not, now people, which include investors as well are seeing ‘how Facebook earns its money’. I’m not referring to the revenue mix, but ‘the ways Facebook employs to earn that money’. And those ways are now being scrutinized from one benchmark: ‘Are those ways ethical enough to command User Trust and as a consequence make money?’.

Normally people become more responsible with age. And the more the age, the more echoeing is the question ‘Are those ways ethical enough to command User Trust and as a consequence make money?’. The Poll also reflects this assertion.

Although, the public also remains wary of Facebook’s valuation, widely vouched as $100 billion, the youngest respondents (age 35 and under) were most likely to say Facebook would be a good investment (59 percent said yes), followed by baby-boomers and Generation X-ers (55 percent and roughly 50 percent respectively), followed by seniors (only 39 percent). Here it's important to say that with growing age people think more about ethics and establishmentism.

Facbook still has a big untapped market, the e-commerce. It can do so with real and online opportunities and virtual credits. But there are two things which it has to shed soon. First is the Geek culture in revenue matters; and second, a CEO which can say no to unbaked and unethical revenue ideas. That apart, if Facebook believes that its biggest asset are people, then it should stop curating user data by deceptive means and try to gain the user trust.

It's here important to say that Facebook will have difficulty make revenue for its users, who are quite engaged socializing on its platform.

About the Poll:

The AP-CNBC poll was conducted from May 3 through May 7, with a sample size of 1,004 participants ages 18 and over. The margin of error for the poll is plus/minus 3.9 percentage points.


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