This week's news on Facebook.
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Is Facebook Moving Back to Massachusetts?
17 MayForbes.com - Technology News
The Speaker of the Massachusetts House of Representatives, Robert DeLeo, is getting local media attention by imploring CEO Mark Zuckerberg to move Facebook's headquarters back to Massachusetts. For DeLeo, it's a cleverly-timed way to get attention for a mind-bogglingly stupid idea. -
Will Facebook adapt to mobile or will mobile adapt to Facebook?
17 MayGigaOM
We all know Facebook needs to become a force in mobile advertising, but just how much of a force? If Facebook were to replicate the success of its desktop ad business on mobile it would account for a healthy chunk of the entire world’s current mobile ad spend. And if it sticks with its planned approach to mobile ads it would need to create a whole new mobile advertising sector from scratch.If Facebook’s future is mobile, it may not be enough for it to merely secure a piece of the mobile ad market: It might need to make the mobile ad industry figure out how to work with Facebook.
Berg Insight calculated that global spending on mobile advertising was $3.4 billion in 2010. And while it’s growing at rate of 37 percent per year, Facebook’s total revenues in 2011 were $3.7 billion, of which $3.1 billion came from ads. Meanwhile of its 845 million monthly active users, more than half of them accessed the social network through mobile apps or its mobile website, which sport no ads.
Of course, most customers are using both platforms, not one or the other, so Facebook doesn’t need to build a $3 billion mobile ad business overnight. But even if Facebook were replicate a fraction of its Web-based ad business on mobile, it would account for a large portion of the money currently being spent on mobile ads.
Mobile hasn’t been unkind to Facebook
Facebook isn’t losing money on mobile today – far from it. eMarketer principal analyst Noah Elkin pointed out that 90 percent of Facebook’s customers are crossing between platforms, meaning they’re generating ad revenue in one way or another. They may not see any ads when they’re accessing the network from their phones, but they’re certainly seeing them when they log in from their Web browsers. One of the reasons those customers remain active and loyal to Facebook is because they have the flexibility to network socially from anywhere, so you could argue that mobile drives more ad views, not less.
It’s the remaining 10 percent, or 83 million users, that Facebook is worried about, Elkin said. Facebook doesn’t make a dime in ad sales off them, and while they may be a small segment of Facebook’s customers now, they’re its fastest growing segment as they’re coming from the developing markets where Facebook’s future growth lies.“The big concern is the mobile-only audience is growing faster than the multi-channel or desktop only audience,” Elkin said. “The long-term concern is that the mobile-only audience will come to dominate the social network.”
Enter the ‘sponsored story’
Facebook’s answer isn’t the display or search advertising responsible for the lion’s share of the mobile ad market today, but the sponsored story, which it only recently introduced on the desktop interface and now plans to migrate to mobile. The format is so nascent that it’s not even really factoring into eMarketer’s current ad spend figures for traditional online spending: to say nothing of mobile.
Elkin said the format is promising not only because Facebook can use it to tailor ad content specifically to its users interests – which it knows a lot about – but that it could also factor in location and presence data unique to mobile. That means more value for advertisers and more revenue per ad. Ultimately that could overcome the limitations of a mobile, where a small screen gets cluttered pretty easily. But it’s also an untried advertising format, and as my colleague Mathew Ingram points out not even Facebook is convinced sponsored stories will work.“If Facebook is successful, one of the impacts will be that it will grow mobile advertising overall,” Elkin said. Google, Apple and Millennial Marketing wouldn’t stop growing in the mobile ad space, but Facebook’s mobile ad revenue would be additive. In fact, one of the reasons eMarketer is projecting such huge growth in U.S. mobile advertising – jumping from $1.45 billion in 2011 to $10.8 billion in 2016 – is because it projects that Facebook will precipitate a surge in new ads starting in 2014. If Facebook flops, then eMarketer will have to revisit its growth numbers, Elkin said.
Don’t piss off your future customers
Facebook faces some daunting tasks. It can’t just a build a mobile ad business. It has to build the mother of all mobile ad businesses. And it has to do so with an ad format that’s still unproven.
Ultimately, its entrenched customers will cut Facebook some slack. They might gripe about ads crowding the limited real estate of their phones, but they’re not likely to abandon Facebook considering how much of their online lives are embodied in the social network. But then again, those aren’t the customers Facebook is losing money on.It’s the mobile-only users just discovering Facebook in India and other far-flung countries across the globe that the company needs to please. For many of them their first and only experiences with Facebook will be through mobile phones. If that experience isn’t engaging (and as my colleague Kevin Tofel writes the Facebook mobile app experience is often sub par) then customers may abandon the social network entirely.
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facebook ipo
16 MayVentureBeat
Facebook’s IPO is being heralded in rather vague terms as the biggest tech IPO in history. But this initial public offering actually does break a few records, and not just in the tech sector.
This week, Facebook’s IPO will be the largest venture-backed IPO of all time, and not in the subjective Kanye West sense. If, as expected, the company’s valuation creeps toward $104 billion, it would be four times larger than Google’s 2004 IPO.
Facebook will also have earned the distinction of raising the most venture capital of any venture-backed company in the U.S. — a grand total of $2.2 billion from some of the biggest names in venture capital around the world. This is almost double the amount raised by the second-place company in this category, Clearwire, a wireless broadband service provider that raised $1.2 billion. It’s also exactly double the amount Twitter has raised to date, $1.1 billion.
Also, Facebook breaks the record for most companies acquired pre-IPO. To date, Facebook has bought 13 other startups, only two more than Twitter, which is the second-most acquisitive company that is still privately held.
“Facebook’s IPO could be the first of many pay days for venture investors,” said Dow Jones VentureSource global research director Jessica Canning in a release today.
“With the company seeking to raise up to $15 billion through its exit and some of that capital likely to be spent on acquisitions, Facebook’s IPO could also be a boon for investors in companies that would pair well with the social media giant. We’ve already seen this with a few targeted mobile acquisitions recently and will likely see more as the social space continues to evolve.”
Some of the mobile acquisitions were part of Facebook’s recent shopping spree that signed, sealed, and delivered startups Instagram, TagTile, Glancee, and Lightbox into the Facebook fold all within the past few weeks.
“Facebook created a path through the venture capital landscape that no one has seen before, said Dow Jones VentureWire editor Zoran Basichin a statement today.
“It created a frenzy of trading in private-market shares, drew non-traditional players into its venture rounds, and established a template for blockbuster success that every start-up and every investor dreams of.”
Still, Basichin continued, don’t expect any other companies to continue down the same path anytime soon — including the much smaller and younger Twitter. “It’s a template that no one else is likely to reproduce,” the editor said.
“In about every way you can think of, Facebook is unique.”
Image courtesy of Jolie O’Dell, Flickr
Filed under: deals
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Inside Facebook
16 MayCNNMoney.com - Technology
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facebook shares
16 MayVentureBeat
Facebook’s initial public offering just keeps growing. The social network announced this morning via an amended S1 filing that it will add around 84 million shares to its IPO, an increase of around 25 percent.
Come Friday, when the company is scheduled to begin trading on the Nasdaq under the symbol “FB,” Facebook will be floating around 421 million shares. The company’s stock is expected to receive its official pricing on Thursday, and Facebook says it will be in the $35 to $38 per share range.
If Facebook’s stock gets priced at the $38 high-end, its IPO would raise over $16 billion, and would make it the largest technology public offering ever, Forbes points out. AT&T Wireless, the current technology IPO leader, raised over $10 billion in 2010.
The additional shares are coming from current Facebook investors Peter Thiel, Tiger Global Management, and James Breyer from Accel Partners, and not from Facebook itself. For that reason, the added shares won’t increase Facebook’s valuation.
Facebook CEO Mark Zuckerberg’s voting power will be reduced from around 57.3 percent to about 55.8 percent due to the new shares. That’s not ideal news for Zuck, but as long as he maintains his majority voting power, he’ll still be able to rule the company as he sees fit. The additional shares likely were a bid to appease the company’s existing investors.
Facebook yesterday added an additional $50 million shares to its IPO, with the caveat that they were part of an “over-allotment” option. We also heard yesterday that General Motors is planning to stop running ads on Facebook, after determining that they were ineffective.
Filed under: deals, social, VentureBeat
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facebook shares
14 MayVentureBeat
Facebook is likely preparing to increase its starting price for shares of Facebook stock. The previously announced price range was $28 to $35; new reports are pegging the starting price range between $35 and $40.
CNN Money reporter Maureen Farrell writes that the social network’s cadre of underwriters for the deal are slated to bump up the price range as soon as tomorrow.
At its earlier range, the Facebook IPO could have raised up to $11.88 billion. At $40 per share, Facebook stands to raise $13.5 billion — of course, that’s if the stock stays at $40 throughout the day, which almost no one anticipates.
In private trading on secondary markets, Facebook shares sold just last month for around $44 each shortly before the company halted private trades in preparation for its IPO.
especially in the first few days and months of trading, Facebook stock is likely to enjoy a quick growth spurt in share price. Analysts have been comparing this initial public offering to Google’s in 2004. Google’s share price started at $85 and currently sits at around $600, with the company recently announcing a stock split.
However, newer tech IPOs can also be more vulnerable to volatility in the general market, as we’ve seen recently with Groupon and LinkedIn stock during March’s downturn.
We recently went around the VentureBeat office and asked everyone, from execs to reporters, what they thought a fair price for the shares would be; here’s their analysis.
Filed under: VentureBeat
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facebook hq
14 MayVentureBeat
On IPO day, Facebook CEO Mark Zuckerberg will be staying local and the social network will ring the opening bell remotely at its 1601 Willow Road, Menlo Park campus, VentureBeat has confirmed with a source familiar with Facebook’s plans.
“News Alert: Facebook to ring opening bell remotely from Menlo Park HQ – Zuckerberg will stay at Menlo Park headquarters $FB,” CNBC tweeted Monday. VentureBeat has independently confirmed that the details of the tweet are accurate and that the company is still determining how much of an executive presence it will have at the NASDAQ in New York.
Facebook is anticipated to make its debut this Friday, May 18. According to some reports the offering is oversubscribed and the social network will stop accepting orders tomorrow.
The social network is currently finishing up the last leg of its investor roadshow, which started last week in New York with a mini kerfuffle over Zuckerberg’s hoodie and demeanor.
The company also recently amended its prospectus to warn investors that mobile is a bigger risk than first anticipated. Recent comScore data also suggests that, because U.S. Facebookers are now accessing the social network more from mobile devices than computers, mobile users are becoming a problem of financial significance for the company.
This story is developing…
Filed under: deals
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The Facebook dilemma
14 MayThe Sydney Morning Herald
How old should a child be before using Facebook? -
facebook IPO
11 MayVentureBeat
We already knew Facebook was huge, but did you realize it has as many monthly active users are there are people in Europe? The company is headed toward an IPO, but where does it stack up against the tech titans that came before it?
The company has been on its roadshow since earlier this week, talking to bankers about potentially investing in the company’s available shares. Facebook is expected to be valued at $10 billion when it makes its stock market debut, making it one of the biggest IPOs in U.S. history. With total revenue for 2011 sitting at $3.7 billion, it is almost a mouse in Google’s $37.9 billion 2011 revenue shadow.
Conversation around the IPO has also been deceiving. Here in Silicon Valley, it seems to be the only thing anyone’s talking about when Facebook comes into the conversation. But of the 66 million people mentioning Facebook on the Internet, less than one percent of those conversations have to do with the impending IPO.
Check out more on how Facebook stacks up in this infographic:
Zuckerberg image via Crunchies2009/Flickr
Filed under: social
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ftc facebook
10 MayVentureBeat
Facebook’s $1 billion purchase of photo-app Instagram caused quite the uproar in Silicon Valley, but it apparently also raised the eyebrows of federal regulators.
Now, just eight days away from Facebook’s scheduled IPO date, we’re hearing the Federal Trade Commission is looking into the social network’s acquisition of Instagram.
Two sources tell the Financial Times the FTC is investigating the deal for possible antitrust issues. Given that, from what we learned exclusively a few weeks ago, the deal was created in order to stick it to the competition, it’s not an unreasonable set of questions to ask.
The FTC is reportedly questioning some of Facebook’s biggest competitors — we’re looking at Google and Twitter, in particular. But in fact, such probes are routine for acquisitions worth more than $66 million or so, and this deal most certainly fits into that category.
Facebook paid $300 million in cash for the photo-sharing app, as well as 23 million shares of Facebook common stock — and Lord knows how much that will be worth after May 18 when the stock goes public.
Based on the starting price range of $28-$35 per share, Instagram stands to get between $644 million and $805 million from the second the bell rings on the 18th. By the time trading closes, there’s no telling how much the deal will be worth; however, we’re fairly certain that those 23 million shares will be far more valuable than the original $1 billion quoted as Instagram’s pricetag for this acquisition.
If the FTC doesn’t green-light the deal, Facebook will pay out a $200 million breakup fee, as stipulated in the social network’s amended S-1 filing.
Facebook’s Instagram acquisition was expected to close in the second quarter of the year; an FTC probe could, but may not necessarily, delay the deal’s closing. We have not yet heard if the FTC’s questioning will have any impact on Facebook’s IPO timing.
Filed under: social
