Updated – June 14, 2011
Many analysts believe Facebook is now set to go with its widely anticipated initial public offering in Q1 2012. What’s astounding is Facebook has lost ground in North America and Europe, but analysts are predicting a valuation as high as $100 billion.
A Web site, www.insidefacebook.com, reported the irony regarding Facebook’s popularity in this article: “Facebook Sees Big Traffic Drops in US and Canada as It Nears 700 Million Users Worldwide.”
It explained where and why Facebook lost members in the month of May:
- U.S. lost almost 6 million down to 149.4 million
- Canada dropped by 1.52 million to 16.6 million
- UK, Norway and Russia each lost more than 100,000
Ostensibly, Facebook’s privacy issues are having an impact.
So, why is Facebook growing? Inside Facebook indicates the site gained 11.8 million users among Third World populations that have recently started warming up to the thought of using the social networking site.
Meantime, many marketers started allocating more of their budgets for Facebook ads, according to a report in Website Magazine, www.websitemagazine.com, as early as Aug. 2010.
“Two years ago the big brands were experimenting with us,” Website Magazine’s senior editor Mike Phillips quotes Facebook COO Sheryl Sandberg. “They started buying with us a year ago. Now, they’re going big.”
Mr. Phillips writes that she claims the social medium’s top advertisers are now investing 10 to 20 times more dollars.
“Facebook appears to be positioning itself for an IPO in 2012,” confirms Francis Gaskins, a widely quoted and respected IPO expert. “Here’s an interesting article.”
If Facebook is inching toward its initial public offering in 2012, shouldn’t it show it’s making profits from ads.
So, what about Facebook as a marketing tool?
“For most companies, it’s not yet completely clear whether Facebook ads are truly effective at generating quality leads or increased conversions/revenue,” Mr. Phillips astutely points out. “What is clear, however, is that Facebook continues to grow its user base.”
He says research firm comScore reports Facebook has overtaken Yahoo as the nation’s No.1 display advertiser.
“Now might be the time to get involved in Facebook advertising,” suggests Mr. Phillips. “Prices have remained steady, the website is still the hottest property online and you can expect those prices to increase sooner than later. You can run a few simple campaigns on the cheap, look for results and optimize in no time at all. There is plenty to gain here.”
As a business-performance consultant, I concur. To quote my good friend, Cork Platts, now a retired Los Angeles marketing guru, a basic marketing tenet is “test, test, test.”
For me, that’s especially true when it’s an inexpensive marketing investment. But be careful to get a return on your investment, and don’t cannibalize your brand. I wouldn’t want a Facebook presence to trump my Web site. Facebook should merely part of overall marketing. Consider: Winners and Losers in Facebook’s Invasion of Google’s Turf.
Meantime, my biz coach sense is that an IPO with a $100 billion valuation doesn’t make sense for a social networking site that’s lost ground in the U.S., Canada and parts of Europe, especially when we’re not sure about its revenue.
Such a high valuation on dubious earnings is reminiscent of all the hype and countless failures in the dot.com bust. Was it that long ago?
From the Coach’s Corner, here are related social-media resource links:
- 11 Tips to Make Money on Facebook
- 5 Strategies to Sell More from Your Web Site
- Invigorate Sales with Customer Retention, Referral Strategies
Mr. Gaskins’ resource links:
(Note: Mr. Platts is also founder of Consultants West, www.consultantswest.com, an association of veteran consultants that meets regularly in Los Angeles. Mr. Gaskins is also a member, and I’m proud to be associated with them.)
“Privacy is dead, and social media hold the smoking gun.”
Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.