Is Facebook clueless about how to justify its IPO price?


Why did Instagram modify its Terms of Use policy? The new policy says:

…to help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you…”

There is no surprise that there was a furor on the web – everybody protested. Such reaction is expected. What is surprising is the response from Instagram:

“…the language we proposed also raised question about whether your photos can be part of an advertisement. We do not have plans for anything like this and because of that we’re going to remove the language that raised the question…” BUT “…some of the data you produce — like the actions you take (eg, following the account) and your profile photo — might show up if you are following this business…”

In essence what they are saying is – we will change the language but we will still allow advertisers to use your content.

Instagram

Instagram is now owned by Facebook

Do you remember that Instagram was bought over by Facebook for 1 billion US$ in April 2012? So why is Facebook so desperate to make money from your photo even at the risk of antagonizing the user? Could it be that they are finding it difficult to monetize the user base? It would seem so if you go by data released by IBM shows then Facebook had almost zero effect on Black Friday sales, and Twitter actually had zero. Forrester had reported similar finding earlier.

So…

Is Social Media Marketing a hype which is about to be busted? Will Facebook ever be able to justify its IPO price?

Udayan Banerjee on Google+

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