Many of us grew up with "Marcia, Marcia, Marcia." For the past few years, the refrain has been "Google, Google, Google." But this past week, it's been all Facebook, all the time.
As we wait for the biggest IPO in tech history to shake out, the question I'm being asked most by clients and especially the mainstream media is, by far, "What's Facebook going to do with all that money?"
I'd love it if "One Buck Zuck" would send me a check. Barring that, some reasonable conjectures can be drawn.
Facebook's S-1 filing contained all the usual risk disclaimers: changing market conditions, loss of key executives, and the like. But there was one zinger in the boilerplate -- Facebook's statement that mobile is growing fast, and that the company can't yet monetize it. It's not too much of a leap from there to the conclusion that millions of dollars can be applied to figuring this one out. An article published the day after the filing suggests we'll see the first Facebook mobile ads in March. Yet mobile means different things to different users. There are smartphones, tablets, and other gadgets to think about in this fast growing channel so clearly, when it comes to mobile advertising, Facebook will require more than one solution. And that's to say nothing of Facebook Credits and other commerce opportunities on mobile platforms. There are plenty of R and D opportunities for Facebook across the mobile spectrum.
Data is Facebook's core product. Not only does Facebook gain more information on its users every day, but that data is getting increasingly complex. In addition to basic demographic data, there are friends and friends of friends. Groups, companies worked at, "Likes" (and soon, "Actions"), what they're reading, listening to, eating, and buying are only the beginning. Managing this data, parsing it, and making it useful and actionable to advertisers and marketers is challenging, to say the least. And this done in ways that can help increase user engagement, create newer and more premium advertising products, extract deeper meaning and clarity from stores of data (so complex it very nearly qualifies as big data) is even more challenging. It's also critical to Facebook's future. Data is what Facebook sells.
What's next for Facebook's platform? Its platform is currently central to a vital Facebook economy.--without it, companies ranging from Zynga to Buddy Media would hardly exist as we know them today. Media companies from the Wall Street Journal to Spotfiy wouldn't be able to reach and interact with Facebook users. It's critical to keep that platform open and to continually expand upon its scope. Is social commerce the next comer? Features that link Facebook more deeply into the real world? Without the platform, Facebook doesn't have the data, so watch for new developments in this arena, too.
Remember when Google was just a search engine? That was years ago, before YouTube, Blogger, Analytics, and a host of other features that now seem integral to the company. Once upon a time they were acquisitions. Google has largely become a roll-up, and Facebook could begin to follow that path as well (maybe by buying a search engine and finally incorporating real search into its platform?). Sure, Facebook's made some small acquisitions in the past, but these are broadly viewed as more a bid to acquire talent, not technology. With a mind-boggling bank balance, that could change.
Silicon Valley engineers are high in demand, and you have to find a way to bring them to your company. In Facebook's case, it's no longer possible to do this with the lure of pre-IPO stock options. Facebook will soon be forced to pay a premium for new talent, particularly as some of an estimated 500 to 1,000 newly minted millionaires cash out. Sure, some will buy houses and cars. But others will yearn to get back to startup culture. They'll start new ventures, or even finance them. Facebook will pay more for talent in the long run, but its IPO will help to spark Silicon Valley's economy, and that can only mean good things for innovation.
Rebecca Lieb is an analyst, digital advertising/media, for Altimeter Group.
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