The prospect of an upcoming Facebook IPO, means several significant changes for businesses. The proposed IPO is expected to reach a projected 100 Billion dollars, raising more than Disney & McDonalds, and six times as big as Google’s.
Facebook founder Mark Zuckerburg is expected to make 25 Billion dollars himself in the deal. With 800 million users, this means 1 in 10 people on the planet use Facebook!
Social Media is ten years old, starting in 2002 with the creation of Friendster, Facebook in 2004, and finally Twitter in 2006. In 2006 Yahoo actually tried to buy Facebook for 1 Billion dollars. In 2007 Microsoft invested 140 million dollars in Facebook.
In 2009 Russian company Digital Sky invested 200 million dollars in Facebook. In 2010 Goldman Sachs and Digital sky invested 500 million dollars. In January 2012, Facebook halted the selling of its shares in secondary markets, signaling an impending IPO.
Many companies have been slow to adopt these latest technologies, initially viewing them as a passing fad for teenagers.
Companies now see the effect of Social Media, realizing it represents a new distribution channel for information; and is here to stay. While several Social Media companies have come and gone or have been reduced in popularity (i.e. AOL, MySpace), Facebook represents the most popular, and most imbedded in our digital lifestyle. According to Postling.com, 79% of social networkers use Facebook.
Aside from the additional stability and advertising opportunities for Facebook as a company, the consumer gains in several significant ways:
#1 – Added Stability
First, the added stability of the Facebook IPO lets consumers know they can rely on this channel for personal communication and to view new products and services. Consumers are creatures of habit, and want to know that they can trust the technology to be around and they can continue to share postings, photos, videos, and news content with friends, family, and businesses.
#2 – Extended Reach for Developers
Second, the Facebook IPO lets developers know that they can extend the reach of their services on a reliable platform and have the incentive to make improvements, which benefits the consumer. From an application perspective, a developer needs to know that a technology will exist far into future, giving them time to secure capital for R&D, perform market research, and then work out all the bugs for the finished product.
#3 – Advertisers Win
And lastly, with the Facebook IPO advertisers can better target their audiences with improved demographics, statistics, and greater numbers of subscribers/members, made all the better by more advertising opportunities with the new TIMELINE feature. Ads currently make up 17% of Facebook’s revenue.
In the old version of Facebook, viewers could only see a week or two of past entries on the main page. With this new TIMELINE feature, viewers can easily go back and look at postings starting from when the profile was originally setup; in some cases representing years worth of entries and pages.
To check out an overview of TIMELINE, click on this YouTube video:
See Timeline in Action! More advertising means more revenue to put back into better functionality for consumers, and the ability to compete with others in the Social Media space.
Many websites and social media companies subscribe to the “razor blade theory” model. The idea comes from the concept of selling a disposable razor handle at a loss, then turning around and selling the blades at a huge markup to make a profit.
In the case of these new technology platforms, content (in the form of online forums, articles, videos, online media) is given away for free. With the millions of viewers accessing this content either via computers or mobile devices, it allows for huge advertising opportunities.
Click here to view the webpage for this fantastic infographic on the Facebook IPO:
Do any of these items apply to you? How do you think the Facebook IPO will affect businesses?
Love the synopsis!