The gossip spotlight is on Facebook this week as Founder Mark Zuckerburg recently announced his plan to set the IPO near $100 billion. While similar social sites, including Linkedin or Groupon, have recently ventured into the public realm, nothing of this magnitude has excited investors in years… if ever. Why is Zuck cashing in now? Some say it’s a reaction to the fact that online advertising will surpass print advertising for the first time this year – via LA Times. Others say it’s time to tap into the mainstream consumer budget for more funding. Regardless, things are about to change – can your marketing plan adapt?
Business columnists and tech bloggers are buzzing with forecasts of what Facebook might change after the big drop. Aside from any consumer-facing developments to the actual Facebook platform, Zuckerburg will surely be pressured to make the website profitable from every angle. This means that advertising costs, making up 85 percent of Facebook’s current revenue, will be the first thing going up. Since higher advertising rates will be a considerable hardship for smaller, up-and-coming brands, Facebook execs will be pressured to increase development in free applications and other inexpensive marketing tools. Facebook’s massive stage has become a responsive venue from which every growing brand could initiate a cult following of individual users. Now, companies that need to stay visible will have to pay a prime cut.
A new and beneficial tool that Facebook is currently testing in beta mode is Action Spec Targeting, which “is designed to help advertisers target users based on actions they have performed.” That means that if I share some camp vibe updates from my recent surf trip to Westport on Facebook, it shouldn’t surprise me to find an ad for Surfer Mag upon my next login.
When Facebook purchased the popular photo-sharing program Instagram just weeks ago, it took a big step towards mobile integration—an arena in which Zuckerburg has acknowledged the need for growth. Since Instagram has never been a profit-yielding company, Facebook will be challenged to turn its popularity into a profit-making business. For now, marketing managers are using Instagram free of charge to connect with over 30 million photo-obsessed users.
What seems to be the most unfortunate outcome of this entire ordeal is that Facebook is considering a new system that would offer individual users the option to pay a fee to make their status updates more visible—instead of its current popularity-based model. Brands will have to factor the additional competition of this “upgrade” when fighting the uphill battle for recognition on the Facebook wall.
Does this mean the downfall of our youthful yet beloved marketing miracle? In the end, there is no guarantee that Facebook won’t cause a great disturbance in the current flow of operations with the IPO. Up to today, it has proven successful in its ability to nimbly adapt and adhere to market changes and needs. If the Facebook website sees major changes like increased advertising or other consumer-facing sell-out tactics, the audience could decrease. As user numbers plunge, so too will the advertising dollars coming from large and small brands alike; investors and Facebook execs will all be monitoring this philosophy closely.
In the meantime, Facebook remains a top-level authority on the general public’s information, having gathered countless amounts of personal data from willing users. Facebook’s unmatched knowledge on the subjects of our marketing campaigns keeps it near and dear to our hearts. Let’s all cross our fingers and pray that the corporate monster doesn’t alter another decent organization for the worse.