Four out of five Facebook users have never bought a product or service as a result of advertising or comments on the social network site, according to a Reuters/Ipsos poll, the latest sign that much more needs to be done to turn its 900 million customer base into reveune.
The online poll also found that 34 per cent of Facebook users surveyed were spending less time on the website than six months ago, whereas only 20 per cent were spending more.
The findings underscore investors' worries about Facebook's money-making abilities that have pushed the stock down 29 per cent since its initial public offering last month, reducing its market value by $30 billion to roughly $74 billion.
Meanwhile, Facebook is under pressure from US lawmakers after reports that the company is exploring ways to let children under 13 onto its social network. The co-chairmen of the Bi-Partisan Congressional Privacy Caucus, Texas Republican Joe Barton and Massachusetts Democrat Edward Markey, sent a letter to Facebook chief executive Mark Zuckerberg yesterday asking him to provide details on the company's plans for allowing access to children under age 13, who fall under stricter regulations around online privacy.
Facebook is looking at ways to let younger children use its website, though the company hasn't made a final decision on whether or how to give them access. While the move would expand Facebook's user base, it would also invite further scrutiny over privacy and security on the world's largest social network.
About 44 per cent of respondents to the Reuters/IPOS advertising poll said the market debut has made them less favorable toward Facebook, according to the survey. In the poll of 1,032 Americans, 21 per cent said they had no Facebook account.
Facebook's 900 million users make it among the most popular online destinations, challenging entrenched Internet players such as Google and Yahoo. Not everyone is convinced the company has figured out how to translate that popularity into a business that can justify its lofty valuation.
Shares of Facebook closed Monday's regular trading session down 3 per cent at $26.90. While the survey did not ask how other forms of advertising affected purchasing behavior, a February study by research firm eMarketer suggested Facebook fared worse than email or direct-mail marketing in terms of influencing consumers' decisions.
Last month when General Motors, the third largest advertiser in the United States, said it would stop paid advertising on Facebook. Facebook declined to comment in detail on the survey, but referred to case studies of companies such as Nutella, which found that a 15 per cent increase in sales was attributable to Facebook, and restaurant chain Applebee's, whose Facebook ads delivered a threefold return on investment.
About two out of five people polled by Reuters and Ipsos Public Affairs said they used Facebook every day. Nearly half of the Facebook users polled spent about the same amount of time on the social network as six months ago.Keeping users coming back is crucial for all social media services, said Gartner analyst Ray Valdes.
"Facebook continuously has the challenge of Facebook fatigue, of the novelty factor wearing off, and therefore they have to introduce new kinds of interaction," said Mr Valdes, citing new features such as the Timeline interface and the planned $1 billion acquisition of mobile photo-sharing app Instagram.
The survey provides a look at the trends considered vital to Facebook's future at a time when the company has faced a harsh reception on Wall Street. Facebook's $16 billion IPO, one the world's largest, made the US company founded by Mark Zuckerberg the first to debut on markets with a capitalisation of more than $100 billion.
Its coming out-party, which culminated years of breakneck growth for the social and business phenomenon, was marred by trading glitches on the Nasdaq exchange. A decision to call some financial analysts ahead of the IPO and caution them about weakness in its business during the second quarter has triggered several lawsuits against Facebook and its underwriters.
Reuters
