By Dave Williams, brandrepublic.com, Wednesday, 29 February 2012 08:00AM
The Wall Street Journal has labelled it the ‘Big Kahuna of stock listings’ but in line with his general management style, Mark Zuckerberg is keeping a low profile and saying nothing about Facebook’s pending initial public offering (IPO).
As of 1 February when S-1 papers were filed, talk of the company raising $5 billion on a whopping $100 billion valuation has become less of a rumour and more of a certainty, and the speculation from Wall Street and Silicon Valley over what this means gets ever louder.
The question on everybody’s lips is what impact will an influx of salivating stockholders have on the social network?
Will it represent the end of Facebook as the world’s best loved online hang-out and mark the birth of a moneymaking machine beholden to board room tyrants and advertisers?
I think not.
I can empathise with the concerns of Facebook fans, bloggers and other commentators.
The moment it floats, some say, Facebook will relinquish total control and influence over its corporate trajectory and long held priorities on placing user experience above all else, including highly lucrative advertising revenue, and may succumb to the pursuit of faster, higher returns.
For sure it will be a precarious balancing act for Zuckerberg and Sheryl Sandberg to maintain the playing field of user friendliness, innovation and product-led strategy when investors are applying pressure for short term gain, but that’s where Facebook differs from other IPOs - its sights have always been set on long term goals.
It has a track record of getting ahead of itself, and its users, for example by releasing products such as the news feed or sponsored stories that were initially met with caution by some factions but went on to be lauded as important, progressive enhancements.
Anyone buying into the Facebook vision must surely do their homework first and understand the way this ball rolls.
Innovation runs in the blood at Facebook. People worry that the monitoring of stock prices will result in stunted development, curbed technical experimentation and a drastic downturn in talent investment.
Conversely, shouldn’t the injection of cash spur more startup acquisitions - already a significant part of Facebook’s operations - keeping new talent flowing through the business and inspiring the next generation of tech entrepreneurs to create?
Wall Street will undoubtedly push for incremental growth each quarter, but this won’t be achieved through a bombardment of clumsy, indiscriminate advertising as some analysts predict.
While there’s no denying that, as an ad platform, Facebook is the next behemoth, they underestimate its immense sophistication and pivotal future role in advertising, which is destined to bring stockholders much bigger and more sustainable returns.
Perhaps it’s not Facebook that needs to adapt its gameplan, but the investors.
The online advertising business will continue to grow - it’s already at the $4.27 billion mark (source: eMarketer) - but not necessarily through increased density ASUs or sponsored stories.
There’s the possibility of Facebook becoming the operating system for delivery of ads on the internet to many platforms simultaneously, as Facebook possibly launches a third-party ad network to reach consumers and their friends all at the same time across multiple devices - think mobile, display, search and in-video ads.
Having said that, based on our CPM and CPC data, we are seeing an increased demand for ad products, which are performing better all the time thanks to new innovations such as postcode targeting, topic targeting and broad targeting, in turn helping to drive up both CPM and CPC pricing, resulting in improved monetisation of the Facebook inventory.
There is also the relatively untapped local market. Having a scalable model that more closely resembles TV buying when it comes to reach and frequency, Facebook adds extra value to local advertising through user engagement, remarketing and the social graph.
Capitalising on its power to drive in-store transactions, I can foresee the likes of Yellow Pages, Sunday circulars, local print, TV and radio all moving to Facebook.
The opportunity for an increased local presence is huge for the social network.
These are less predictions, more inevitable advancements because innovation lies at the heart of everything Facebook does, not dollar signs.
This is the start of an exciting new era, not the beginning of the end.
And where issues surrounding user experience are concerned, I think we can be assured of one more thing: no amount of money or badgering from investors could ever persuade Zuckerberg and co to take the ‘social’ out of the world’s biggest social network.
This article was first published on brandrepublic.com
Agency: Bartle Bogle Hegarty