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While social media sites are wildly popular with consumers, it turns out those same users give the sites low scores for satisfaction, ranking the category above only airlines and cable and satellite TV providers, according to a report released on Tuesday. Still, that dissatisfaction is unlikely to affect payments processors that are trying to exploit social media as a potentially rich source of e-commerce transactions, says one of the experts who produced the report.
Sites like Facebook and MySpace, though relative newcomers to the Web, have struck a chord with consumers, attracting tens of millions of new users every month and providing a ready-made online marketplace for game developers and other purveyors of digital goods. Facebook alone has seen its user count exceed 500 million. That growth has attracted processors that see a huge growth market for payments. Earlier this year, for example, PayPal Inc. struck a deal with Facebook to process payments for Facebook ads and Facebook Credits, the site’s proprietary currency (Digital Transactions News, Feb. 18).
But the social-media category, though growing rapidly, is a flop when it comes to pleasing users, according to Foresee Results, an Ann Arbor, Mich.-based research firm that tracks the effectiveness of Internet businesses. Using data from the American Consumer Satisfaction Index, the firm says social-media sites generated an aggregate score of 70. That’s almost dead last among measured categories, with only airlines and subscription-TV services scoring lower, with both categories at 66. By contrast, Internet merchants scored 83. Measured for the first time this year, the social-media category “has the lowest industry aggregate score of any of the e-business or e-retail industries measured by the ACSI,” says Foresee’s report.
Facebook, in particular, shows poorly in the satisfaction measurement, with a score of 64, barely ahead of MySpace’s 63 and well behind the top-scoring site, Wikipedia (77). Foresee says it analyzed those sites that attracted the most traffic and commanded the most market share. Google Inc.’s YouTube logged a 73, while all other sites measured came in at 72. Out of the 30 online companies the ACSI measures, Facebook and MySpace finished 29th and 30th, according to the report. “Any way you slice it, Facebook and MySpace turn in an abysmal performance,” the report notes.
That performance is due to the sites’ increasing efforts to find ways to generate revenue through marketing and advertising, and from frequent changes to the user interface they present, according to Foresee. By presenting ads based on user behavior on the site, the companies offend more and more consumers who were attracted to the sites as non-commercial forums, the firm concludes. “They’re stepping into the social space [with ads],” says Larry Freed, president and chief executive of Foresee. “You’re marketing to me based on watching what I do. It approaches the creepy side.”
But that hasn’t stopped Facebook’s growth, in particular, as Freed notes. “It’s the biggest game in town,” he says. In part, this could be because the bar has been set fairly low for social media sites, as most of the sites are scoring little better. Indeed, Freed thinks the sites will likely score better next year simply because users will learn to live with marketing pitches. “Change, the evolution on the monetization side, is what’s throwing people for a loop,” he says. “It’s about people getting used to it.”
And while deals like PayPal’s depend in part on processing payments for those intrusive ads, Freed says the sites’ dismal satisfaction scores are unlikely to have an impact on their transaction potential. “The biggest issue we saw was privacy, but it’s not the risk of identity theft, it’s ‘you’re marketing to me and I don’t like that,’” he says.
