As Investors Fawn Over Facebook, Poll Finds User Distrust, Apathy

FacebookBy CNBC's Kayla Tausche and Jesse Bergman
(Associated Press contributed to this post)


Facebook's initial public offering will be the largest and perhaps the most highly anticipated Internet deal in history.

Faced with great expectations, however, Facebook is staring down some potentially unnerving obstacles when it comes to key areas of monetization and growth: public distrust and display advertising apathy.

More than half (57 percent) of Facebook users polled said they never click on ads or other sponsored content when they use the site, according to a new AP-CNBC poll. Another 26 percent said they hardly ever engage in such activity. Only 4 percent of users say they often click on ads - results that are only slightly better than the 2-3 percent 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 the effectiveness of those ads and how much they're willing to pay for them. In the first quarter, Facebook generated 82 percent of its $1.06 billion in revenue from advertising sales. In the company's online IPO pitch to retail investors, Chief Financial Officer David Ebersman said the company is working to make ads "more relevant, more social, and more engaging" as it looks to grow.

Facebook

While Facebook has been able to decrease its reliance on sponsored content (down from 98 percent of sales in 2009), the hopes of expanding the company's e-commerce footprint also faces public resistance, the poll showed. A majority of participants (54 percent) said they wouldn't feel safe using the platform for financial transactions such as purchasing goods or services; only 8 percent 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 - one that could be vital for the company's future growth.
  • For complete poll results, click here
The public also remains wary of Facebook's valuation, widely bandied about as $100 billion, with just 3 percent 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 percent among active investors). Views are also split on whether or not shares of Facebook stock would make a good investment - with progressively less positive opinions for older age groups.

Facebook

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

As for Mark Zuckerberg, the wunderkind CEO who turned 28 on Monday inspires somewhat tepid confidence as a leader, with only 18 percent of respondents saying they were extremely or very confident in his ability to run a large publicly 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 percent 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 six to seven 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.

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 Facebook IPO is expected to price Thursday night, and the stock will start trading Friday.

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dachc2

Last night, after hearing the news that one of the co-founders of FB has revoked his USA citizenship, I deactivated my account. The very idea that someone who profitted substantially from the US renounced his citizenship to avoid paying taxes his reprehensible. It is as bad as a Presidential nominee having hidden money in a Swiss bank and the Cayman Islands just to avoid paying taxes to the country he now wants to be President of! I hope many will do the same and deactivate their accounts.

May 16 2012 at 10:10 AM Report abuse rate up rate down Reply
1 reply to dachc2's comment
Koz

Most Swiss banks and Cayman banks charge you to keep your money there. Second those bank are more stable then the ones here in the states. Thats why people keep their money there, plus I believe you do pay taxes on this money also, that was changed a few years ago.
But it still is not as bad as a president that forged his birth certificate.

May 16 2012 at 10:24 AM Report abuse -3 rate up rate down Reply
wspceo1

Well this is going to become a great big oops as far as the use of Facebook. However, once they get their mitts on your money, what they do with it is going to become most important. If they buy a phone company or a chain of jewish delis, anything that will bring a revenue flow because you can only look at your facebook page so much and then its like, ok now what. So just hold back a dolla rfrom your ipo investment and buy a lottery ticket. Its aboutt eh same chance as winning. Dont forget General Motors already pulled all their advertising as it doesnt work on Facebook and secondly dont forget to look at the recent disclosures that users are leaving web based fcebook and going to mobile text messaging. All that means is that 99% of what facebook does becomes irrelevant. Good luck.

May 16 2012 at 10:07 AM Report abuse rate up rate down Reply
skytel9

FAD!

May 16 2012 at 9:18 AM Report abuse +1 rate up rate down Reply
klee1701

I think with the stock offering, facebook will become a thing of the past. I have had a facebook page for years and rarely use it. The only time I do use it is to try and track down people from my past, and I am rarely successful. As a general rule, I do not click on any ads on any website, that is a sure way to get viruses or spyware.

May 16 2012 at 9:11 AM Report abuse rate up rate down Reply
jneal11254

I agree with the naysayers. Facebook has a long history of trying to sell its usdrs' private information. I do not trust them at all, and almost never post any personal information. I have never clicked on one of their ads, nor do I join groups or "like" anything. I think Facebook is going to turn out to be another one of those internet stock tempests in a teapot.

May 16 2012 at 9:02 AM Report abuse rate up rate down Reply
drakkusshadows

LOL All you FaceBook losers will be paying monthly subscriptions before long. Too funny!! Bow down and obey the Zuckerburg!!

May 16 2012 at 8:50 AM Report abuse -1 rate up rate down Reply
bwfree3

by putting all your info and what your daily happenings are the feds got their dna on you .

May 16 2012 at 5:44 AM Report abuse rate up rate down Reply
lifehub

So obvious the jealousy AOL has for FB.....

May 16 2012 at 5:29 AM Report abuse rate up rate down Reply
mhsden

When you give investment bankers first crack at buying stock. I dont think that will help people trust you ; /

May 16 2012 at 5:12 AM Report abuse rate up rate down Reply
ray

goodbye fake book its for the fakey

May 16 2012 at 4:59 AM Report abuse rate up rate down Reply