Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
BREAKING NEWS - United States Galloping Towards Nuclear War with China Proxy North Korea - 26th Sep 17
Here’s Why Turkey Can’t Stay Out Of Syria - 25th Sep 17
Hidden Gems Shows A Foreboding Stock Market Future - 25th Sep 17
10 Reason You Should Use Ridesharing To Save Money - 25th Sep 17
Commodities King Gartman Says Gold Soon Reach $1,400 As Drums of War Grow Louder - 25th Sep 17
Stock Market Mixed Expectations, Will Stocks Continue Higher? - 25th Sep 17
22 charts and 52 questions that will make you Buy Gold - 25th Sep 17
Speculation Favors Overall Higher Silver Prices - 25th Sep 17
The Advertising Breakthrough Revolutionizing Gaming - 25th Sep 17
Stock Market Forming a Reluctant Top - 25th Sep 17
Grid Forex Strategy - All You Need to Know - 25th Sep 17
Catalonia, Kurdistan, Patriotism, Flags and Referendums - 24th Sep 17
Two Key Indicators Show the S&P 500 Becoming the New ‘Cash’ - 24th Sep 17
The Felling of Sheffield's Big Street Trees 2017 - Dobcroft Road - 24th Sep 17
Advantages of Forex Trading - 24th Sep 17
Stocks, Gold, Dollar, Bitcoin Markets Analysis - 23rd Sep 17
How Will We Be Affected by a Series of Rate Hikes? - 23rd Sep 17
Fed Quantitative Tightening Impact on Stocks and Gold - 22nd Sep 17
Bitcoin & Blockchain: All Hype or Part of a Financial Revolution? - 22nd Sep 17
Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms - 22nd Sep 17
Will North Korea Boost Gold Prices? Part I - 22nd Sep 17
USDJPY Leads the way for a Resurgent Greenback - 22nd Sep 17
Day Trading Guide for Dummies - 22nd Sep 17
Short-Term Uncertainty, As Stocks Fluctuate Along Record Highs - 21st Sep 17
4 Reasons Gold is Starting to Look Attractive as Cryptocurrencies Falter - 21st Sep 17
Should Liners Invest in Shipping Software Solutions and Benefits of Using Packaged Shipping Software - 21st Sep 17
The 5 Biggest Bubbles In Markets Today - 20th Sep 17
Infographic: The Everything Bubble Is Ready to Pop - 20th Sep 17
Americans Don’t Grasp The Magnitude Of The Looming Pension Tsunami That May Hit Us Within 10 Years - 20th Sep 17
Stock Market Waiting Game... - 20th Sep 17
Precious Metals Sector is on Major Buy Signal - 20th Sep 17
US Equities Destined For Negative Returns In The Next 7 Years - 3 Assets To Invest In Instead - 20th Sep 17
Looking For the Next Big Stock? Look at Design - 20th Sep 17
Self Employed? Understanding Business Insurance - 19th Sep 17
Stock Market Bubble Fortunes - 19th Sep 17
USD/CHF – Verification of Breakout or Further Declines? - 19th Sep 17
Blockchain Tech: Don't Say You Didn't Know - 19th Sep 17
The Fed’s 2% Inflation Target Is Pointless - 19th Sep 17
How To Resolve the Korean Conundrum  - 19th Sep 17
A World Doomed to a Never Ending War - 19th Sep 17
What is Backtesting? And Why You Need Backtesting System? - 19th Sep 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Facebook's Mobile Revenues Strategy in Trouble

Companies / Tech Stocks Nov 16, 2012 - 07:27 AM GMT

By: Janet_Tavakoli

Companies

In its last earnings report Facebook touted its mobile revenues strategy--a strategy that it said depends on "sponsored stories"--as the answer to its loss on a GAAP basis (the accounting benchmark for U.S. corporations), declining margins, and sharp decline in revenues from Zynga's games, once 12% of its revenues.


But a pending court ruling puts its entire mobile strategy in question, because Facebook will have to give adults the option of opting out of sponsored stories after pressure from a class action suit by consumer privacy protection groups.

Reuters' Dan Levine just reported that U.S. District Judge Richard Seeborg would "very shortly" rule on the revised settlement Facebook was required to submit after he rejected its earlier proposal this year. The problem is that, among other things, Facebook's "sponsored stories" violated California law. Users' "likes" were being used without compensation to anyone but Facebook, and users had no way to opt-out. Never mind the problems Facebook has in Europe, where privacy laws are much more stringent.

As part of the settlement, Facebook said it would engineer a tool so users can view any content already displayed in "sponsored stories," and users could then opt out. Advocacy groups want an even stronger deal, because children shouldn't have to opt-out; they should only be able to opt-in and then only with parental consent.

The problem all along is that what Facebook claimed were "sponsored stories" were actually hijacked by Facebook when users merely "liked" a product. Users were unaware that years later this seeming innocuous action could result in Facebook using this as an endorsement in advertising without compensating them. Moreover, at the time users expressed no wish to make their preferences public as a "sponsored story."

Dallas Mavericks and Other Brands Saying Goodbye to Facebook

Perhaps Facebook's new strategy of asking companies to pay up to "promote" posts to fans will bail Facebook out? It doesn't seem that way, since advertisers, already suspicious of bot-clicks on ads, are now irate due to their suspicion that Facebook is suppressing their posts in order to cyber-blackmail them into paying so that fans can read those posts. Whether the advertisers are correct--and it appears they are--or not isn't the issue any more, because they are leaving.

Previously I wrote about an advertiser that left when it discovered it was being charged for bot clicks (it was not accusing Facebook of being the perpetrator, it could have been a third-party infiltrator). Earlier this week, Dan Lyons at Readwrite reported that billionaire Marc Cuban is pulling the Dallas Mavericks and 70 of his other companies off of Facebook, after Facebook asked him to pay $3,000 to reach 1 million of his fans. Cuban did a screen grab of Facebook's "offer," and said that while earlier he only considered moving, now he's actually doing it. Facebook said it wasn't a shakedown, Cuban obviously disagrees.

Facebook Revenues?

Facebook may see increased revenues from campaign spending when it reports fourth quarter earnings, but the bad news for shareholders is that it will likely be eaten up by its huge tax liability from handing out shares as compensation to employees. Now the future of its web-based advertising and its mobile revenue strategy is in question. Meanwhile, its costs to bring in new users has risen, and it isn't generating anywhere near the revenues it thought it would from many of the "emerging" countries it courted. It's also still blocked in China.

Disclosure: I'm long puts on Facebook

By Janet Tavakoli

web site: www.tavakolistructuredfinance.com

Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago's Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008). Tavakoli’s book on the causes of the global financial meltdown and how to fix it is: Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (Wiley, 2009).

© 2012 Copyright Janet Tavakoli- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife