Comms to play big part in Facebook post-IPO growth

Facebook dominated the news this week as it released its IPO filing with a view to raising $5 billion, which would value the social network at something in the region of $100 billion.

Facebook dominated the news this week as it released its long-awaited IPO filing with a view to raising $5 billion, which would value the social network at something in the region of $100 billion.

It's an historic moment in business, let alone internet, history. The decision by the Mark Zuckerberg-founded website to go public became inevitable given the astounding scale the company achieved in such a short space of time.

It's easy to be blasé about the figures attached to this growth story, but just consider that, even in the 24 months between 2009 and 2011, revenue grew from $777 million to $3.7 billion, with pretax profit rising from $254 million to $1.7bn – that's astonishing in anybody's language.

And it's an oft-quoted fact that the site has 845 million users who are active on it each month, but over half of those – 483 million – actually use it every day, which is even more impressive.

Facebook's income has primarily been driven by advertising up to now, but one risk factor associated with the business is that it commands lower ad rates than its bitter rival Google's search ad offering.

Furthermore, ad revenues are already starting to stall a little, though a significant number of media companies would be ecstatic with the year-on-year ad growth rate of 44% Facebook achieved in 2011.

A surprising 12% of Facebook's revenue comes from its tie-up with games developer Zynga, which is a potential risk factor if that relationship were to falter. The Zynga number contains portents of the future for Facebook, as it diversifies its revenues and ensures it is not wholly reliant on advertising.

Clearly marketers and brands have to play in a place where so many of their consumers hang out. And, beyond advertising, some of the most effective and innovative PR and communications campaigns are now happening on this and other social networking platforms. I can see the continued rise of brands engaging in earned and shared media being another area of focus for Facebook as it attempts to ensure continued growth.

Those of us with long memories remember how quickly the fortunes of hot internet companies can change, with Yahoo and AOL two high-profile examples of one-time darlings of the tech industry that are now floundering and struggling to define themselves in maturity.

But if Facebook continues to concentrate on innovation and services that fit naturally within its own platform, rather than me-too offerings, it will navigate the inevitable disruption IPOs bring to any business and continue to provide an excellent vehicle for communicators to engage their customers and stakeholders directly.

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