Posts Tagged “facebook”
Correlation may not be causation. Companies with a recent startup complexion may be able to move fast, but not this fast. But Facebook’s recent acquisition of Israeli startup Redkix demonstrates how the social media giant already knew it was in trouble before it suffered the largest single-day stock loss in Wall Street history.
The acquisition, on first blush, seems curious. Redkix flagship product is designed to connect the enterprise workplace, not exactly a social media application. As such, the acquisition gives us insight into where Facebook is branching out. Workplace collaboration, which is Redkix’s sweet spot, has little to do with social media. But what the two companies do share is collaboration. That’s what’s key here.
Other than that, further details were conspicuously absent in the announcement. So what’s really going on? With little information, analysts are forced to speculate beyond their comfort zones, myself included.
My bet is on broadening Facebook’s portfolio. If we learned anything from yesterday’s stock dive of Facebook it’s that the social media giant lives and dives by advertising. Recent changes to Facebook’s advertising platform really impacted sales as the algorithm change had an immediate negative impact on advertisers.
Said one startup marketer:
“We went from reliable and predictable Facebook ad spend ROI to zero! We thought there was a glitch in the program or something and even called Facebook to make sure everything was okay with our campaign. Once we verified the technical setup was good to go, but still no sales, we scratched our heads for a few more days and dug deeper, as deep as we could go, until we just shut down the campaign. It was that bad.”
So there you have it. If Facebook can’t deliver to its advertisers, yesterday’s historic stock dive with Facebook is no mystery. The company simply must diversify its offerings while, at the same time, fixing its advertising algorithm. In addition, now committed to transparency in privacy concerns, along with Mark Zuckerberg staying some rather stupid things of late, the many problems and challenges Facebook is facing are loud and clear.
See featured story: Artificial Intelligence, part 1.
Markets may not always be as efficient as we would like, but in this case, what happened to Facebook was no accident.
Diane Israel is a Chicago native and long-time supporter and advocate of the American Israel Public Affairs Committee (AIPAC). She is also famous for her culinary recipes. Diane can be reached at Diane@IsraelOnIsrael.com