The Post-IPO Facebook

May 22, 2012

If there is one thing we are used to from Facebook -- or, at least, are used to complaining about -- it is change. The company has a history of introducing new features at will and then abandoning them. Going forward, though, Facebook's willy-nilly changes may be frowned upon as investors from Friday's IPO start putting in their two cents. 

As Forrester's Josh Bernoff SVP of idea development tweeted this past week, "Buying Facebook shares? The original investors took their risks & will now get their rewards. Now the risk is passed on to you." When the closing bell rang on Friday, Facebook raised about $16 billion, was valued at short of $105 billion. But investors are not the only ones taking on risk; marketers that think Facebook is the Holy Grail also gamble with company money.

If a tree falls in the forest, does anybody hear it? If a brand talks on Facebook, does anyone listen? Facebook itself recently indicated that only 16% of brands' posts actually show up on the newsfeed of the people who "like" the brand -- unless you want to pay Facebook via its reach generator to guarantee 75%.

I am not saying Facebook is not of value to marketers. The social media giant is almost always part of the social media strategy for my clients, but the important word in this statement is "part." Facebook is not the be all and end all of social media. It is part of the social media equation and while Facebook is extremely powerful, marketers must stop thinking about Facebook and start incorporating other social channels. 

But there is another aspect of Facebook that cannot be ignored. As Nick Bilton highlighted in his New York Times article "Disruptions: Facebook's Real-Life ‘Spidey Sense'", Facebook has the power to make or break other digital platforms. As Facebook determines which apps to highlight, so goes the emergence and success of those featured social apps. Bilton wrote: "Because it connects Facebook users to more than nine million apps and services through Facebook Connect, the Open Graph developer platform, and the hundreds of millions of like buttons that perforate Web pages across the Internet, the company can see what people are using. Facebook is more tapped into the pulse of people online than any company on the planet."

Thus Facebook has a heads up on every other digital platform. For example, Facebook saw a massive increase of Instagram photos flowing into Facebook and it knew what the next step needed to be: the acquisition of Instagram. Like Facebook, marketers need to stay abreast of other emerging digital channels.

Going forward, Facebook is well positioned to remain the key -- but not the only -- platform in the social world, but it will need to reposition itself from a marketer's perspective. While most companies now realize the importance of having a social presence, an overwhelming percentage that buy into social media still do not understand or see Facebook producing measurable results for brands. The real issue is that Facebook needs to be part of an integrated social marketing strategy and plan. It should be part of an integrated owned, earned, and paid media plan. Companies should focus on producing holistic winning social media measurable results. Facebook execution plays into these results, but Facebook metrics alone should not be performance indicators.

As the leader in the social space, Facebook needs to be the one championing this holistic methodology in order to appeal and embrace marketers (the revenue side of its operations). It has been shy in doing so, but now the pressure is really on. Facebook is a public company and Mark Zuckerberg and his team need to answer to quarterly results. I am certain this will result in a change on the company and the Facebook we know today will be dramatically different one year from now. While Zuckerberg may continue to talk about the importance of sharing what's going on with your connections, there will be a deeper focus on revenue generation. The real question is whether Facebook can carry off both sides successfully.

As Facebook feels increased pressure on the revenue front, I see a potential user conflict. What most brands fail to recognize is that users do not go to Facebook to connect with brands. They go there to connect with friends and acquaintances, and catch up on conversations, trends, and even current events. A small percentage of brands have figured out how to be compelling and engaging with users such that users actually want to hear from them. As Facebook introduces more ad and revenue tactics (such as the recently announced reach generator) it will be interesting to see how users react. It will be a delicate balance for Facebook to keep usage high while introducing greater revenue generation. Keeping Wall Street, brand advertisers, and users all happy will be one massive effort.