I'm afraid Facebook (NASDAQ: FB ) is about to make a terrible mistake. This one could cost the leading social network millions of users. Do this, and Facebook might even do an impression of a dying MySpace right before our eyes.
Facebook is desperate to monetize its spectacular consumer reach. Being a free service with a billion users, advertising is the natural way to do this. User attention begets ad views, which beget a few clicks, and the coinage should start rolling in. But there's a very fine line between monetizing eyeballs and driving them away.
Facebook must be very careful not to let the marketing become obnoxious, or its users would be happy to take their social networking clicks elsewhere. I hear Google (NASDAQ: GOOG ) has a pretty clean alternative in Google+. LinkedIn (NYSE: LNKD ) might turn its professional service more consumer-friendly given half a chance. And you never know what the next wiz kid is cooking up in his garage as we speak. Like I said, Facebook could turn into the next MySpace disaster in a hurry.
Unfortunately, Facebook is about to tip that delicate balancing act off kilter very soon. AdAge reports that the company will slap video ads into the crucial news feeds by April "at the latest." And, oh yes, it will be obnoxious.
The company is already talking to potential advertisers to hammer out the final product design. Ad spots might be limited to 15 seconds, which has AdAge debating whether it'll change an industry accustomed to 30-second messages or simply drive advertisers away. Short clips might be the only way to make users accept this new intrusion, so bravo to Facebook for making a customer-friendly decision. Moreover, each video spot would be limited to three daily views per user -- another good idea.
But that's where the good news ends.
The videos will play automatically, no clicking necessary. On the desktop, Facebook wants to fill your screen with it as the video expands out of the news feed space. Similar attention-hogging will happen on smartphones and tablets, too, though AdAge wasn't sure exactly what that will look like.
And this is where Facebook users tap the "back" button and find a friendlier, less annoying social service. It's the end of Facebook as we know it, unless CEO Mark Zuckerberg changes his mind. I wouldn't bet on that famous ego bending before the service breaks down.
After the world's most hyped IPO turned out to be a dunce, most investors probably don't even want to think about Facebook as an investment. But there are things every investor needs to know about this company. We've outlined them in our newest premium research report. There's a lot more to Facebook than meets the eye, so read up on whether there is anything to "like" about it today, and we'll tell you whether we think Facebook deserves a place in your portfolio. Access your report by clicking here.