Why Facebook Investors Have Been Ignoring Zynga’s Bad News
Social media mystery of the day: Facebook (FB) shares have risen this week even though one of its biggest revenue generators, Zynga (ZNGA), was beaten down by bad news. Its time-wasting games, which include FarmVille and Words With Friends, are falling out of favor. Here’s what investors had to say:
That 18% spread is thanks to the hardworking public relations folks at Facebook, whose quiet period ended Tuesday. They were clearly ready to silence -- or at least drown out -- critics who have had more than a month to air their grievances and concerns. Facebook swung first at people who declared its advertising ineffective. It pointed out a new study from comScore, which was partially commissioned by Facebook, to show that people who “like” a company on its site buy from that company more frequently. (Ironically, it was also comScore data that let to Zynga’s trampling.) Facebook also released internal research to back its points and put its executives on the horn with reporters from the Wall Street Journal and the Financial Times.
And today Facebook announced “Facebook Exchange,” a real-time bidding feature that will let advertisers zero in on consumers by using browsing history, much like they do using Google (GOOG) and Yahoo (YHOO).
So yes, Zynga brought in almost a fifth of Facebook’s stated $3.7 billion in revenues last year. But witness the power of damage control.
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