Facebook is becoming one of the most dangerous places on the internet. According to Reuters, “Scammers break into accounts posing as friends of users, sending spam that directs them to websites that steal personal information and spread viruses.”
Since Facebook has, by some measures, more than 200 million members, the problem is extremely serious and could undermine the growth of the social network and cut into the time that current members spend on the site.
The cybercrime issue could also damage Facebook’s reputation with marketers, a reputation is just beginning to build in the hope of increasing its modest revenue by bringing in large national advertisers. Industry sources suppose that Facebook will lose a modest sum of money on $500 million of revenue this year, which is a tiny sum compared to the size of its audience.
Facebook is already struggling to get advertisers to pay attention. It is hard for marketers to target discrete demographics and behavior patterns which is what large companies have grown accustomed to being able to do on web portals like MSN (MSFT), AOL (TWX), and Yahoo! (YHOO). Facebook’s tens of millions for friends are often leery about giving out private information and the cybercrime attacks are likely to increase concerns, making their behavior patterns even more impenetrable for advertisers.
Facebook’s success may lead to its failure. A huge collection of unruly people, some of whom have sinister intentions, is not the place that major marketers want to build or maintain their valuable brands.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks