Facebook's biggest challenge: Too many people like it

People have gotten used to how the social network works. And that's a problem when the company releases new products.

Richard Nieva Former senior reporter
Richard Nieva was a senior reporter for CNET News, focusing on Google and Yahoo. He previously worked for PandoDaily and Fortune Magazine, and his writing has appeared in The New York Times, on CNNMoney.com and on CJR.org.
Richard Nieva
5 min read
Mark Zuckerberg
Mark Zuckerberg at a Facebook event, June 20, 2013. James Martin/CNET
More than 1 billion people across the planet know what Facebook is all about -- how to use it, when to use it, what it's good for. It's the type of familiarity most companies dream of -- when your service becomes second nature, the way Googling has become for search.

All good, right? Not so fast.

As Facebook rolls out new products -- something it's done a lot of in the past year -- it's meeting resistance. Or indifference. At least that's the way it seems, based on the small bits of information we can get from Facebook or those who watch what goes on across the network. Trouble is, people get used to certain things and, at the risk of sounding trite, making them change their ways is hard.

"We consumers are very comfortable compartmentalizing our behavior," said Michael Pachter, an analyst with Wedbush Securities, who's a Facebook fan in general. "We go to Amazon to shop. We go to LinkedIn to upload our resumes. We don't go to Facebook. I don't know why we don't, but we don't."

That's the bind Facebook is in. Facebook needs to evolve. It must, actually, if it wants to fight off new services vying for our social attention (hence, its purchase of Instagram), and it's been working extra hard to do just that since it went public in May 2012.

So, for instance, Facebook added a way to send gifts to your Facebook friends' homes; it built a social search tool to take on Google and give you less reason to leave Facebook; and it added hashtags, those #symbols that help people navigate the blizzard of information on Twitter, as a way to keep up with the social lingo and eventually please marketers eager to spend against categories.

Facebook CEO Mark Zuckerberg has unveiled some products with wide-eyed enthusiasm, presumably convinced that Facebook lovers will follow his lead, just as more and more have since he set out to Silicon Valley from his Harvard dorm room almost a decade ago. But that's not happening -- or least not quickly.

#viral #searchthis #click
After hashtags became wildly popular on Twitter, and migrated to services such as Instagram, it seemed inevitable that Facebook would add them. Some users already would incorporate them into their posts, as a means of expression, but they served no function. So in June Facebook did exactly as expected and added them.

And yet the early results show that Facebook and Twitter are very different social networks. Facebook analytics firm EdgeRank Checker released a report this week that found that hashtags have no effect on whether or not a post goes viral -- which, of course, is exactly what Facebook and its advertisers want to happen.

EdgeRank concludes that hashtags are ineffective because people aren't clicking on them. Facebook declined to share numbers on how many people are using hashtags or even give examples of hashtags that have become popular. "It takes time to learn how people use hashtags on Facebook," a spokesperson said.

Fair enough. It is early. But it could also mean that the lingo created for Twitter just doesn't translate to Facebook. "It's a norm that grew up on Twitter," said Charlene Li, founder of the research firm Altimeter Group. "Using them on Facebook is cumbersome. It's almost like this extraneous thing."

The company trotted out Graph Search in January.
So what about search?
The shame about Graph Search is that it's an excellent product with nary a use case. And when Facebook introduced it, the company laid the rhetoric on thick with its importance to the social network. At a press event in January, Zuckerberg called it one of the company's three pillars, along with the News Feed and Timeline.

Even before that, Zuckerberg boasted about how much users are already searching through Facebook. "We do on the order of a billion queries a day, and we're basically not even trying," he said last September at TechCrunch Disrupt, when he first revealed that Facebook had a team working on search.

Since releasing Graph Search, however, the company is no longer bragging. Asked for specific -- or even general -- usage numbers, Facebook is mum, except to offer vague information like a list of the top types of searches users conduct. They're for people, photos, then places.

Facebook rolled out the product fully across the US early last month, so, let's be fair here. It might turn into a hit yet. Also, Facebook never said it was setting out to replace Google with Graph Search. The two experiences are very different, but that's exactly the point. Zuckerberg has stressed that searching on Facebook could prove more valuable -- for users and, by implication, marketers -- than traditional searching.

It all sounded -- and still sounds -- promising. Why not, to take an example Zuckerberg used, make a query such as this: "What sushi restaurants have my friends gone to in New York in the last six months and Liked?" The problem is, so far, there's no evidence people are doing that.

Last month, Facebook stopped selling physical gifts.
The e-commerce stumble
Facebook Gifts was arguably the best shot to date of the company rewiring users to use Facebook for something other than posting baby pics and arguing about politics. Facebook, after all, is the world's biggest birthday calendar, so adding an easy way to send presents to friends for birthdays or other occasions noted on Facebook seemed entirely logical.

Facebook launched Gifts at a splashy event last November at New York's FAO Schwartz, shortly after acquiring social gifting startup Karma. Analysts and pundits were optimistic that people would jump in and send Facebook friends real gifts -- from the likes of Brookstone and the Gap -- delivered to their door, even suggesting this was the first step in Facebook taking on Amazon.

Facebook Gifts used to ship wine as well.
And yet, late last month, Facebook retooled its offering, scrapping all physical goods and now only selling gift cards and promo codes from places like Starbucks and Target -- an offering Amazon rolled out in June. It even stopped letting people send bottles of wine.

It's a far less ambitious gambit. Pachter, who last November predicted Gifts could become a $1 billion business for Facebook, figures the logistics got to be too much to justify -- which would imply, perhaps, that not enough people were using it to make it worthwhile.

While Facebook wouldn't disclose any numbers about Gifts, a spokesperson did offer up one figure: Roughly 80 percent of the purchases on the platform are virtual gift cards. That's not surprising, but surely must be disappointing to some inside the company who were hopeful people would use Facebook and not Amazon to send a tear-open-the-box birthday gift.

Amazon's Jeff Bezos, it's safe to say, isn't too worried.