We are suddenly seeing an increase of bearish FB news coming out of the media leading up to earnings this week.
Now that the stock has found a ceiling it seems that investors are finding more reasons to sell, and the article below could be as good a reason as any.
Important points from the article:
Effectiveness of newsfeed ads differ between desktop or mobile placement. Mobile ranges from 3 percent Click-through-rate to 6 percent CTR (very high vs. Google and others) Desktop is 0.5 percent CTR to 2 percent CTR.
Newsfeed ads are only seen 5 percent of the time – Facebook limits this ensure a good user experience, but this is bad for an advertiser’s message frequency.
Facebook is at the upper range of what advertisers will pay for. They’re getting respondents but they are not converting (buying). The engagement metrics are still not there in comparison to other traditional ad methods.
Last year, the original concern for Facebook was that more people were switching to their mobile site and it wasn’t clear if the company was going to be able to serve ads as effectively in mobile-formatted browsers. Facebook invalidated these concerns with their last earnings release as mobile revenue increased. Now the new concern seems to be, after successfully leading the mobile users to the advertiser’s waters, will these users drink (i.e. click the buy-now button)?
When Facebook users spend 6 hours a day catching up with friends, it appears that they are loathe to do anything else, including shop.