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Should Advertisers Worry About Facebook’s Recent 83 Million “dubious” Accounts Announcement?

Posted on the 09 August 2012 by Brawilly @therealbrawilly

Mark Zuckerberg could not have anticipated the current media onslaught when he listed Facebook on the Nasdaq in mid-May this year. The young man has seen off at least 1 bruising legal battle in the recent short history of this thriving social network, but that era may not come any close to the relentless heat that he will be feeling for the foreseeable future.

First, about the investors and the raw IPO deal

Facebook share price performance
As Zuckerberg is learning, going public means you cannot avoid the close scrutiny of the scandal-hungry media. Unfortunately for him, the road leading to Facebook’s listing was already fraught with self-imposed potholes. Take for instance the fact that there are things that should have been said to all investors at the time of listing to temper their expectations of Facebook’s future growth prospects, but apparently only a select few of them were made privy to such information. The alleged reason for concealment from all the other investors is that this was going to impact negatively on the listing share price that was $38 at the time. As the media started peeling off Facebook’s skin and finding out the adverse information themselves, the share price followed with a steep decline, currently at more than 50% since listing, and this has left a lot of investors aggrieved.

To make matters worse, Facebook’s latest announcement that 83 million of their registered accounts are either duplicates or fictitious has fueled the fire. As can be expected, the media have been having a field day, using words such as “dubious” accounts (Sky News), ”fakes” (CNN) and “illegitimate” accounts (BBC) in their articles about this latest announcement. I sensed an insinuation in media reports that this information was also known at listing but was not revealed to the investors at the time. Facebook’s failure to reveal aside, to me it sounds rather ingenious that investors did not know there ought to be dubious accounts in this behemoth’s registered base. My argument is simply that  this is a characteristic of ALL social networks. If they (investors) did not know this information at the time of listing, then they cannot blame Zuckerberg for their ignorance.

Now, to the subject of this post.

Should advertisers worry about Facebook’s dubious accounts?

This is an important question, because advertisers are driven by numbers, ahead of all else. I shall tackle the issue with this metric being the sole measurement shortly. It is key to repeat – all social networks have fictitious and dormant accounts, and this is not avoidable. Thus, the question should not be whether there is existence of such accounts, but rather what is the quantum. Facebook’s 83 million dubious accounts is a large number in absolute terms, but it is only 8.7% of this social network site’s over 950 million registered accounts! It follows then, that all the media brouhaha about this “breaking” news is just that – NOISE – that should not be taken seriously by advertisers. To qualify this point, some of the unverified Twitter stats claim that this microblog’s volume of tweets comes of only 5% of its more than 500 million registered accounts. Twitter guards its registered account information closely, hence all analysts can go by are estimations. By the way, I count myself in that 5% of active twitterers (@YesItsBraWilly).

It is great to know that a social network site an advertiser spends money on has the numbers. The bar graph (below left) shows that Facebook satisfies this need by a long stretch with the number of unique visitors accessing this site monthly, compared to all other sites. However, there should also be more comparative metrics that advertisers look for, such as the prospect that visitors will stick around long enough on a social site, which increases the prospect that they will see placed advertising. comScore’s bar graph (below right) indicates that Facebook does the best job of all the other social sites, making it the most preferred social network horse to bet your marketing money on.

Facebook offers best return for advertising Money

Facebook offers best return for advertising Money

On a concluding note, there were rumblings in May of this year when GM decided to pull off its Facebook marketing budget worth over $10 million (nothing but a coincidence with listing date?). Understandably, this withdrawn budget left a huge gap in Facebook’s advertising revenue. You can read more about it on this link. Two cynical questions are asking: (a) Has GM moved their marketing money to any other online site? (b) If not, did this have to do with Facebook as an effective advertising medium per se, or did it have anything to do with GM’s own cost pressures? You be the judge.

What are your thoughts regarding Facebook’s 83 million dubious accounts?

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