Facebook IPO: Bubble or Bargain? Success Hinges on Mobile, TV
Job growth and social change are at the core of Facebook’s impending IPO. It’s a heart-warming thought coming from Sheryl Sandberg, Facebook’s COO, over the weekend. In today’s market, IPOs in any industry are questioned as sound investments, and the mere mention of Facebook’s IPO will set off a flurry of discussions and comparisons. While Facebook has set the bar for IPO expectations in the social tech scene, others like Groupon have had a tough time maintaining clout after launching an IPO for fund-raising. For Facebook, a focus on their business model, namely their verticals for future growth, will determine the success of their highly anticipated public offering.
With rumors of an IPO coming as early as this week, Facebook is, for once, making headlines for something other than mandatory profile updates and privacy concerns. While there’s fear an IPO could ruin Facebook’s “startup” appeal and slow down innovation, an initial public offering could raise enough capital for Facebook to more aggressively grow its verticals. Two areas of importance for Facebook moving forward include mobile and social television. It’s part of a larger “connected device” trend that’s delivering content through more channels, and as this space expands, Facebook will need to monetize the social aspects of these channels as well.
Facebook Mobile
Facebook’s mobile strategy has been pretty limited to apps so far, favoring iOS in terms of launch schedules and feature updates. And Facebook’s actual apps center around social interaction and accessing account information, doing little to extend their platform’s ecosystem for Facebook apps, particularly games. This is where Facebook will really need to build out its ecosystem if it hopes to gain ground in the mobile sector, where Google, Apple and even Microsoft are already ahead.
Looking at the latest rumors, Facebook’s plans for mobile include a handset of its own. This isn’t likely the way to win in the mobile arena–there’s enough devices on the market, and plenty of competing operating systems. Even Android is diversifying across niche devices like the Kindle Fire, which has a stripped down version of Google’s mobile OS, adding to the fragmentation woes that plague developers, retailers, carriers and consumers alike.
What Facebook needs is a solid mobile extension of its own platform, that will enable better points of integration for the companies building apps for Facebook’s site and/or mobile marketplaces. Sure, you can tap Facebook contacts for a round of Words with Friends, but this is still a segmented initiative on the part of the game publisher. Unifying a web and mobile presence will be a key software development for Facebook moving forward.
We’re already seeing the necessity of this with Zynga, which is making its appeal to mobile gamers and forced to leave Facebook behind in the process. Increasing gamers on tablets and smartphones in today’s market means diversifying away from the very platform that brought Zynga to the point of success to launch its own IPO, especially with Facebook imposing a 30 percent tax on revenue made on its website. In order to retain the value of its ecosystem, Facebook will have to support the mobile transition for its developer community, and possibly better incorporate its offerings with the mobile market mainstays, like Android and iOS.
Facebook already has a budding relationship with Microsoft, one of its high profile investors, which has already integrated Facbook’s social graph into its search results and facilitated deals like Skype’s video calls on the network. As Microsoft continues to layer up its own platform, tying efforts with Windows 8, Windows Phone and Xbox, Facebook could make room for an easier transition on this front.
Facebook on TV
Facebook is a term associated with nearly all things social, whether online or off. The worldwide network has set national revolutions in motion, held firm as a platform for religious and political debate and enabled a new sense of globalization as far as culture and access are concerned. So when we think of TV’s future as being a social one, it’s hard to avert a discussion about Facebook as well. But even more than mobile, Facebook’s absent from the social TV trend in many regards, though it presents a grand opportunity for extended channel distribution as well.
You don’t have to look further than the first month of 2012 to realize the growing importance of socializing the tube. The Super Bowl is rank with advertisers seeking ways beyond Facebook Pages and tweets to engage viewers, reeling in participation from General Motors, Coca Cola and Shazam. These brands in particular are leveraging mobile devices to send viewers directly to a website where they can gain more information about a product, unlock free content and qualify for prizes. With approximately 60 percent of all Super Bowl viewers expected to be within arm’s reach of a smartphone or tablet, mobility is becoming an important avenue for television to become more interactive and social.
The first week of 2012 also brought a slew of connected device expectations from TV set makers like Sony and LG. Not only are they building out their own integrated system, but many are looking to Google TV as a platform to extend the newest social TV trends. At CES this year we saw the future of TV, and it’s a highly social one, with in-screen chats, recommendations, sharing functions and rewards systems. And Google’s much further ahead on this initiative than Facebook, given its Android platform and default social interactions that are cataloged every time you use a Google-powered app or service. Apple, too, has demonstrated initiative in this space, though its personal media cloud approach is lacking social capabilities.
Leave it to apps, and even cable providers to fill in the missing gaps here. Even Comcast’s jumping on this bandwagon, testing a social TV experience dubbed Xcalibur in Georgia. It involves a recommendation engine and “friend trends” powered by Facebook. Companies like GetGlue have also run with the social TV trend, building insight around marketing trends while rewarding viewers all the while.
Facebook’s ads = social monetization
Beyond merely powering existing gaming and TV efforts, Facebook will namely benefit from these extended channels by finding a way to loop things back into its own ecosystem. Facebook’s true value lies in its ability to access users and their preferences, creating hoards of useful marketing data alongside an audience that can be monetized in a series of socially oriented ways. It’s true that marketing has become very social, but above all, accessibility matters. Facebook’s building a presence in the mobile and TV space, but it hasn’t reached a major point of influence for its own monetization or ad distribution.
There’s a new age dawning for socially driven marketing, and TV is a great way to attract the biggest budgets in media to the socially situated. Social content management provider thismoment recognizes the convergence of connected devices and the future of marketing, a challenge that their new CMO John Bara will take head on. Thismoment is building the technology for big ad shops, simplifying the transition for brands like Coca Cola, and bridging gaps for the likes of Google. This all effectively leverages thismoment’s Digital Engagement Channel, a platform where brands and agencies can create, distribute and optimize branded and UGC content across Facebook, YouTube and beyond.
Facebook’s IPO will create jobs for the company, no doubt. And those jobs will likely further Facebook’s goals around mobile and TV verticals as part of a larger scale approach to new media marketing. Social is one of many considerations encompassed in new media marketing, and Facebook will have to find away to continuously ad value to its social platform amidst the growing network of associated platforms currently overlapping its space.
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