Facebook poll finds user distrust, apathy

As investors fawn over the social network's IPO, an AP-CNBC study highlights the challenges and hurdles.

By MSN Money Partner May 15, 2012 10:57AM

By Jesse Bergman and Kayla Tausche


CNBCFacebook’s public offering will be the largest and perhaps most highly anticipated Internet deal in history. But faced with great expectations, Facebook is staring down some potentially unnerving obstacles when it comes to key areas of monetization and growth: public distrust and display advertising apathy.


According to a new AP-CNBC poll, 57% of Facebook users say they never click ads or other sponsored content when they use the site, with another 26% saying they hardly ever engage in such activity. Only 4% of users say they often click on ads – results that are only slightly better than the 2-3% clickthrough rate some experts consider the benchmark for effective banner ads.


While the company makes money, in part, simply by displaying sponsored content, user clicks are a critical part of an advertiser’s calculus when gauging how effective those ads are and how much they’re willing to pay for them. In the first quarter, Facebook generated 82% of its $1.06 billion in revenue from advertising sales.  In the company’s online IPO pitch to retail investors, CFO David Ebersman says the company is working to make ads "more relevant, more social, and more engaging" as it looks to grow.




And while Facebook has been able to decrease its reliance on sponsored content (down from 98% of sales in 2009), the hopes of expanding the company’s e-commerce footprint also faces public resistance, the poll shows. A majority of participants (54%) said they wouldn’t feel safe using the platform for financial transactions like purchasing goods or services. Only 8% said they would feel extremely or very safe in doing so.


While Facebook currently has a limited market for real goods and services (most financial transactions are done for virtual goods and games), analysts cite e-commerce as an extremely lucrative, and untapped, market for the platform – and one that could be vital for the company’s future growth.


The public also remains wary of Facebook’s valuation, widely bandied about as $100B, with just 3% of respondents saying they thought the company would be undervalued at such a number – half said they thought it would be overvalued (that view rises to 62% among active investors). Views are also split on whether not shares of Facebook stock would make a good investment – with progressively less positive opinions for older age groups.    


The youngest respondents (age 35 and under) were most likely to say Facebook would be a good investment (59% said yes), followed by baby boomers and Generation X-ers (55% and roughly 50% respectively), followed by seniors (only 39%).               


As for Mark Zuckerberg : the wunderkind CEO who turned 28 on Monday inspires somewhat tepid confidence as a leader, with only 18% of respondents saying they were extremely or very confident in his ability to run a large publically traded company like Facebook. Yet, pinning down a specific reason was difficult for respondents who neither cited his age, temperament, nor reputation as significantly affecting those abilities.              


Facebook users have consistently cast a wary and suspicious eye on the platform: 59% of respondents said that they had little to no trust in Facebook to keep their information private. Yet despite those ongoing concerns, the number of users (and their engagement) continues to increase. Facebook has grown to 901 million monthly active users worldwide, with personal computer users spending 6-7 hours per month on the site (compared to just 3 minutes for Google+ users), according to recent data from ComScore.


For its part, the company has taken steps to combat certain user concerns – particularly on the issue of privacy. Last week, the site disclosed additional information about how it captures and utilizes data from users.


But charting a future course may prove more difficult than meets the eye for the company, according to the poll. And navigating that landscape under the daily pressures of a public company could prove even more difficult.          


The AP-CNBC poll was conducted from May 3 through May 7, with a sample size of 1,004 participants ages 18 and over. The margin of error for the poll is +/- 3.9 percentage points.


The Associated Press contributed to this post.


More from CNBC.com


Facebook commenting that it takes user privacy seriously is like Exxon saying they are really concerned for the environment.


But the odd thing is that so many people supposedly distrust Facebook, yet everyone still uses it-including myself as of 2 weeks ago. Why did I do it? WHY I SAY!!!! OH GOD HEAR MY CRIES FOR MERCY and FORGIVENESS!!!


Litmus test and fail # 1...I finally relented after many complaints about being one of only 3 people in the civilized world not on Facebook. Being the clever guy I am and knowing all about Facebook's sinister plan to exploit your personal identity and the identities of every living person you've ever shared breathing space with, I decided to "anonymously" register to avail myself of the many virtues of Facebook. OK, I can only think of one like the picture sharing, but I'm sure there are more, right? Anyways, while registering I used as little info as possible and an alias. Boooyaaaahhh Facebook goons!!! I beat you at your own game!!! So I thought!


Low and behold about a week after registering, I discovered Facebook somehow linked my real name with my alias, although I never used my real name during registration. That would have made for a neat magic trick, if only I wanted to be amused. This only confirmed my suspicion that Facebook is the devil. 


My advice to anyone that has a desire to still have a soul is to stay away from Facebook like the plague.

Oh, please don't destroy my credit, or cyber bully any of my children Mr. Facebook Security analyst. I take it all back. I really love you guys...really!
May 15, 2012 2:43PM

facebook has so many spammers in the wings i would never buy thru them!  i constantly get a popup about "would you like to receive only the content delivered safely" .......   WHAT!?!?!!?  of COURSE i only want the safe content? 


the various apps and games are a virus playground.  so why would i want to click on ads?  when i want to buy something, i do not start at facebook

May 15, 2012 2:44PM

facebook has so many spammers in the wings i would never buy thru them!  i constantly get a popup about "would you like to receive only the content delivered safely" .......   WHAT!?!?!!?  of COURSE i only want the safe content? 


the various apps and games are a virus playground.  so why would i want to click on ads?  when i want to buy something, i do not start at facebook

May 15, 2012 2:40PM

Facebook has a lot of users--and a big percentage of those users HATE Facebook. I'm on there because I need the connections it offers, and there's nothing else out there that does that. But so far I have never played a game or purchased anything on Facebook, and I don't intend to; and I certainly don't spend much time on the site. 


As for buying the stock--there's no way I would touch the IPO. However, once all the hoopla has died down--if the performance and the price looks good, I might buy some...even if I feel the need to hold my nose as I do it.

May 16, 2012 2:16PM
Social media is already in a bubble. Just look at Linkedin, which has a P/E ratio of 683 and PEG of 8.5, or Zynga with negative earnings and a P/S ratio of over 5, or Groupon with negative earnings and a P/S ratio of 3.5.  

Just compare these companies to Apple, which has real earnings, a P/E ratio of 13.5 and a PEG of .71 - and they even pay a small dividend now.  Google has a P/E of 18.5 and a PEG of 1.  

Maybe I'm missing something, but I prefer to invest in proven companies, such as Apple, Google, Intel, or even Microsoft.  I won't get rich over night, but I will sleep better.

May 16, 2012 9:31AM

General Motors has pulled its advertising from the site. The Facebook IPO has all the makings of becoming within a year or less, a dot-com bust all its own.



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