2013.06.1500:56:06UTC+00Facebook decided to trim ad products risky, according to analyst

Facebook Inc. is still fine-tuning its business model, but an analyst says the social network’s latest change is fraught with risks.

Facebook last week said it was scaling back its ad products from 27 to “fewer than half of that” in a bid to simplify its portfolio.

“Over the past year, we have been gathering feedback from marketers about our ads products. One point we heard loud and clear is that we need to simplify our product offering. As the services we provide to marketers have grown, so have our new products; while each product may be good on its own, we realized that many of them accomplish the same goals,” Facebook said in a blog post.

A key goal, the company said, is to “eliminate redundancies.”

Pacific Crest Securities analyst Evan Wilson said it was a tricky move.

“Decisions like this may or may not be good for users and advertisers over the longer term, but could increase risk to near-term revenue growth,” he wrote. “Advertisers have long been confused by the value proposition of the Facebook advertising product, and this is a clear reaction to that, in our view. However, the near-term impact is potentially more confusion. Also, as long as these big changes continue, we see it as a sign that Facebook is still searching for the right monetization strategy.”

Wedbush analyst Michael Pachter disagreed.

“It seems to me that fewer products are less confusing, not more confusing,” he told MarketWatch. “If they have only 12 ad formats, it is much easier for advertisers to select one.  More importantly, advertisers will be able to test several formats to see which is most effective, but will only have to test a handful of products to get their point across.  Essentially, Facebook is trying to make this easier to use, and it sounds like the right thing to do.”

Still, the market is still clearly waiting for Facebook’s next moves. The company on Friday sent invitations to media for a June 20 product event. The stock turned positively when news went out. But Facebook shares later slipped back into the red closing with a fractional loss.