Media

Facebook’s IPO Troubles Cuts Loyalty Measure (FB, GOOG, LNKD)

In February, Facebook Inc. (NASDAQ: FB) was the leading brand in the social networking category of a customer loyalty index compiled by research firm Brand Keys. Following the company’s recent IPO, Facebook now resides in fifth place in the category, behind Google Inc.’s (NASDAQ: GOOG) YouTube, Twitter, Pinterest, and LinkedIn Inc. (NYSE: LNKD).

Brand Keys notes:

[Facebook’s] IPO has caused the Facebook brand to lose consumer engagement and loyalty – the ultimate leading-indicator of profitability – a 7% loss in overall brand equity. … What was once a community is now being viewed as a business, and that changes things substantially.”

The glitch-ridden IPO cost Facebook a loss of -11% on the ‘self-image’ scale and a loss of nearly 20% on the ‘trust & security’ scale. The company’s scores on two other measures — ‘ease of connection’ and ‘brand value & content’ — were unchanged.

From a user’s point of view, Facebook’s product offerings haven’t changed much since the company’s IPO. But a loss of trust in Facebook’s brand does not bode well for the company’s efforts to attract more advertising. Users could transfer their loss of trust in Facebook to a lack of trust in advertisers. Brand Keys’ study is not good news for Facebook.

Shares in Facebook are down nearly -4% just after noon today, at $27.08, after posting a new post -IPO low of $26.83. The high is $45.00.

Paul Ausick

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