Facebook Follies meet Economic Reality

by John Galt
May 15, 2012 16:25 ET

 

Does the sock puppet from Pets.com bring back any flashbacks of reality? How about these old internet dynamos and how they are doing these days:

 

 

 

 

 

 

 

 

 

 

 

 

 

The list of companies could fill pages but the reality is that a profitable model must be in place or demand for the product to justify expenses for investment, product purchase, or advertising expenditures. The highlights above of “Yahoo Auctions” and “Google Answers” should remind everyone that even the big boys make mistakes and on the eve of one of the most over-hyped I.P.O.’s in U.S. history, this story via Reuters and the Wall Street Journal speaks volumes as to how quirky internet business models still are:

 

GM plans to stop advertising on Facebook

 

Why? If everyone believed the financial media hype, one should be buying Facebook stock for their family, children, and future kittens the family cat might have. But General Motors, as piss poorly as it is run and burned through billions of taxpayer dollars, summed up the reason for the cessation in paid advertising in a nutshell as this excerpt from the article highlights:

 

GM said it will still have Facebook pages marketing its vehicles, but it will drop use of paid ads. Anyone can create a Facebook page at no cost. GM pays no fee to Facebook for its pages, which allow the automaker to reach consumers directly.

 

“We regularly review our overall media spend and make adjustments as needed…it’s not unusual for us to move our spending around various media outlets – especially with the growth of multiple social and digital media outlets,” GM said in a statement.

 

Thus before everyone gets too excited about the direction of Facebook, the company and its concepts, remember what happened to one of the founding fathers of the internet which was “too big to fail” according to conventional wisdom in the mid-1990’s. Of course, Netscape floundered and failed to exploit the opportunity it had in that era and only time will tell if Facebook becomes the MySpace of this decade.

 

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