Facebook dominated the headlines with its $16 billion IPO and $104 billion valuation. But the company’s shares quickly declined from the $38 initial asking price to just over $28 today; now the social media kingpin is facing more pressure than ever to convince the market it can bring enough money home.
Facebook has a lot of eyeballs at an arm’s length, but with one of the lowest click-through rates in the industry its 900 million users don’t generate nearly as much ad revenue as investors would like. Yesterday I talked about how an aggressive mobile strategy may be one of the options on the table, but for now the challenge is being tackled one update at a time.
The blogosphere is buzzing over Highlight, an addition that gives users the option of paying to promote their status updates. Curiously Facebook’s virtual currency is not listed among the current payment option, but that may change soon.
Highlight is only available to a very limited number of users at the moment, and their reaction to this newest feature will decide whether or not it will become available for the rest of us. There’s certainly a lot of room for improvement.
At the moment a message’s visibility on one’s feed is determined based on popularity and source. Providing users with as much promotional value they can afford may prove to be effective for the occasional posts, but frequent Highlighters may end up having a rather negative impact on how users expect the system to manage their social graph. In time, this could render the service entirely obsolete while causing considerably more harm than good.
Regardless of the long term impact, this is only one of the recent moves Facebook made to attract advertisers. A couple months ago it introduced the Premium and Offers formats.