Is Facebook a Social Network or an Advertising Network?

First, let me extend my warmest congratulations to Mark Zuckerberg and his team at Facebook for reaching the 1 billion user mark. To build a network where one person in seven is a user is an amazing feat.

That notwithstanding, in an effort to prop up its faltering share price, is Facebook being forced to become more of an advertising network than a social network? Based on some recent advertising-related launches, it would seem so.

Specifically, I’m referring to Facebook Exchange (FBX) and Promoted Posts.

Facebook Exchange

It makes perfect sense for Facebook to leverage its massive advertising inventory to allow retargeting, a practice that’s been a staple in the online ad world for years. Some would even wonder what’s taken Facebook so long to get around to it. Still, the timing of its launch seems less than coincidental.

Promoted Posts

This, to me, is the best indicator that Facebook is reacting to the IPO debacle. Not only are Promoted Posts no longer free for businesses (I never thought it would remain free forever.), Facebook has started offering the feature to its members at $7.00 a pop. Now, that does seem a bit far-fetched and quite uncharacteristic, especially when you consider that Facebook touts it is “free and always will be.”

I know that the company has been testing Promoted Posts in some countries since May, so maybe I’m raising a unwarranted concern. But, what really concerns me is whether Facebook will show greater allegiance to its shareholders than to its 1 billion users. I mean, isn’t the mandate of every public company to satisfy shareholders? So, why should Facebook be any different?

Everyone knows that the vast majority of Facebook’s revenue comes from advertising, so what are we seeing? More advertising.

Not to be a doomsayer, but I wonder if this could be the beginning of Facebook’s downfall. Perhaps that, too, is a far-fetched notion, but it’s not without precedent. Even now, we’re beginning to see the rise of non-advertising oriented social networks, most notably App.net, which promotes itself as a “service that puts users first.” Certainly, others will follow its lead.

I’m certainly no prophet, only an observer, but I believe there is cause for concern and I’m not the first one to think so. Technology Review writer Michael Wolff said back in May that, “For all its valuation, the social network is just another ad-supported site. Without an earth-changing idea, it will collapse and take down the Web.” That’s an audacious statement if ever there was one!

If Facebook becomes, as SCT editor Paul Marsden asserted in a recent post, an “online ad company,” could it follow the same path as other previously predominant social networks? (Well, could it?)

Nothing lasts forever, not even Facebook.

Today’s article is sponsored by Payvment: The #1 Social Commerce Platform