social media watch
Posted by Mark J. Miller on August 24, 2012 10:04 AM
When Facebook went public back in May, shares went out the door for $38 a pop. The price has never closed higher than that, and in fact has plummeted. On Monday, it hit a low of $18.75, less than half the original stock price.
Not helping the site’s profile to potential investors was the unloading of 20 million shares by PayPal cofounder Peter Thiel, Facebook’s first outside investor who now sits on the company board, last week. It was a move CNBC’s Jim Cramer said sent a terrible message to other investors. “To me, Thiel’s sale is basically saying, ‘Hey, all you chumps who bought Facebook, listen up. I am a responsible investor and a megatron gazillionaire, and I know better than to own this piece of trash.’ I hope you see that’s the case, too,” Cramer said, according to CNBC.com.
Not exactly what Mark Zuckerberg was hoping for.
So the social media site that has more than 955 million users needs to find new ways to drum up some cash for its hungry investors. On Wednesday, it announced that it will be ripping a page out of Google’s playbook and linking advertising to its search function, Dow Jones reports.
Users of the site who use the search function will now be greeted by advertising linked to their search when the results page comes up. Known as Sponsored Results search advertising, it “uses a model whereby advertisers pay when users click on the ads, which are targeted to particular entities on Facebook and not to individual keywords,” Dow Jones reports.
Facebook can only hope that the new revenue stream will do as well as it did for Google, which brings in much of its river of cash flow from that source.