I will never boast to be a financial expert, but sometimes the World of the Web changes due to financial happenings. Hence we can’t ignore the upcoming IPO of Facebook, and the impact of this on SEO and SEM.
The current initial public stock offering values the current social-networking giant at $75 billion to $100 billion. This would make it the largest IPO in history for a web based company. it also shows the latest “web-investing boom” as claimed by USA Today.
The current offering, details some interesting facts of Facebook’s current financials, and it’s primary share holder (Mark Zuckerberg)
- $3.7 billion in revenue and a $1 billion profit in 2011
- That nearly doubles the 1.97 billion in revenue from 2010
- 845 million members, half are mobile users
- Mark Zuckerberg‘s cut will be approximately $24 bullion
- He made $1.49 million in 2010, and will only ask for a $1 salary in 2013 (how nice of him)
The offering also calls out some of the risks to investing on the IPO. It claism that theya re in the “highly fickle and competitive social networking arena”. They also claim that Google, Twitter, and Microsoft (who has some financial ties to Facebook) as it’s primary rivals. It also notes the high risk that Google can provide with a possible integration of Chrome, Android, and Google + (we also posed this Search+ discussion the other day). If this happens it would put Facebook at a great disadvantage.
The IPO would also put Facebook, and it’s executives on the defensive. They will need to boast sales, and ramp up revenue to maintain such a high valuation. This would mean:
- They need to improve their ad marketing. They grew 104% in 2011 but are only expected to climb 52% to $5.8 billion in 2012, and 21% to $7 billion next year according to eMarketer.
- They need to increase their “game providers” from what they have so far. Companies like Zynga (creators of social hit games like “Words with Friends”, “Hanging with Friends” and just about Everything with friends”) accounted for 12% of Facebook revenue in 2010.
“Facebook is not as effective as paid search (on Google, Yahoo and Microsoft),” says Dave Beltramini, director of online strategy for G5, a marketing services firm. “The intent of consumers on Google is more about shopping. On Facebook, people are more social, looking at photos of their friends’ kids.”
So what does it all mean?
So we know that Facebook has changed the world. We know that social media plays into Search Engine Optimization, and now Search Engine Marketing. But what does the IPO do to it?
Well to be simple, it puts them on a level playing field.
- Expect to see less frequent, un-communicated changes. They will have share holders to report to.
- Don’t expect them not to change. They are in the social market, and they have to stay “trendy”
- Expect to see a push to focus more on the delivery of ads to specific audiences. Currently the cost per thousand impressions (CPM) is 22 cents. This is less than the industry average (of 50 cents) and miniscule to Google’s which is closer to a few dollars
- Don’t expect them to be fast about it. They will wait for others (like Google) to prove out some of these concepts and follow Apple’s “steal and improve” mentality
- Expect more partnerships. They will continue to partner with other service providers, and leverage their API’s to allow other types of interactions. Things like direct sales through a Facebook page (as companies like Shopify with the Zibabba app) will become more prevelant for small businesses
So it is coming. Zuckerberg will be rich (not that he isn’t already) and us SEO experts will need to stay on top of the world changing right under our feet.