Invest in Facebook: It’s a Good Bet
Does anyone really believe Facebook won’t make it? Since when does anyone really listen to Wall Street? Let’s face it, Wall Street is still sour. They drank the Kool-Aid and it wasn’t sweet.
Facebook was forced to go public by the SEC. The revenue growth was phenomenal and they were investing in R&D as they should have been. Then the unexpected happened. A perfect storm. After years and years of waiting, the smartphone market finally started to impact the world in a significant way. You can thank Google’s Android platforms for the acceleration. Facebook wasn’t ready and they got caught with their pants down. Had Facebooks’s IPO been a year or two earlier, the public and Wall Street would have been in awe with the growth of this stock; $30 a share or better.
Don’t count Facebook out just yet…
Here is why I would bet on Facebook and the Zuckster (and you should, too).
1) DATA, DATA, DATA
Facebook is ridiculously strong. They have serious amounts of data on everyone and data is tomorrow’s currency. Each day approximately 3.2 BILLION likes and comments are recorded. Nearly a billion monthly active users worldwide rack up face time with the social network. On average, users spend 6 hours a month on the desktop version of Facebook.. Think about that! It’s almost a full workday every 30 days plus mobile usage.
The world now works for Facebook. What a concept. Our job is to create content & engagement. Facebook has almost a billion unpaid content creators.
2) Internet Domination
Facebook has cemented itself in our lives by becoming the most powerful communication distribution platform. Our Facebook profile is no longer just a social hub but also a universal key to access most of the internet. Facebook connect is a go-to authentication/registration platform for many other websites like CNN, Foursquare, Tripadvisor, and more. Almost every popular mobile app allows Facebook registration, authentication and access. Some people won’t sign up for anything unless it has Facebook Connect due to the ease of use.
3) Between the Election and the Holidays, Revenue will Soar in the 3rd and 4th Quarter.
Obama’s marketing is too strong and has way more brand equity then Romney. Obama’s word of mouth capabilities far exceed those of his nemesis. A sheer look at the numbers show the disadvantage the republicans have – Obama has 28M Facebook fans and 19M+ Twitter followers, Romney has 5.6M+ on FB and 987,000+ on Twitter. The Republicans need to outspend and innovate now. When it comes down to pushing people into the voter booths, the smart marketer is going to use Facebook and all of it’s new advertising methods to their advantage. Sponsored Stories and Promoted Statuses will lead the way for this new revenue. The first step is to drive as many likes, shares, comments, and other types of social media fodder possible. They will use our own friends/family to try and sway us in one direction or the other. They will pay to promote their status updates so more of their user bases see the message. A normal Facebook post only reaches an estimated 16% of fans; both camps are surely going to augment that low exposure with some dollars. With over $200 million being spent currently on advertising, you can be sure a healthy chunk of that is going right to Facebook.
As far as the holidays go, they will be the cherry on top of the political ice cream sundae. Holiday spending was outrageous last year and there’s no reason to think this year will be any different. In 2011, 94% of CMOs said that they employed Facebook for their social advertising needs during the holiday season. The holidays will be one last financial surge for Facebook before they close their books on 2012.
4) Brilliant people working to improve Facebook daily.
New user growth had to slow down eventually. Now, their job is to make each one of the 955M active users more valuable during that average 6 hours. For starters, they’ve got brilliantly talented people working on adding more revenue. They are testing products, user experiences, and a variety advertising executions faster than anyone can in the industry. How? We are all Facebooks test subjects. If they are releasing a product you bet your ass it tested well enough to be announced. Want early adopters? No problem. Want tech moms? Got em! Church going members of the RNC? Done! Facebook has the ability and sells the ability to create and communicate with any type of person down to finite details. If you want to target 30 year old golfers that ride or love motorcycles, it is likely you can communicate with that target audience.
Facebook just released a new app for iOS. It’s faster in many ways, very well constructed. They are starting to understand other ways to monetize and Sponsored Stories is leading the way: already pulling in $1M a day in revenue for Facebook. They are already making part of the money back they were getting by serving the old crappy ads on the right side of the site. The funny part is they have been rolling out Sponsored Stories slowly and paying close attention to peoples’ reaction. It’s proving to be an interesting ad unit in mobile, garnishing clicks and valuable interesting impressions.
Sponsored Stories are connecting brands and people by showing how many of your friends like a brand page, offering up exposure. Facebook is banking off the fact that people trust other people, specifically friends and family. It is believed that a Facebook user has an average direct connection to 200 friends/family . Each of those users have opinions/interests and are spreading word of mouth messages with more speed and effectiveness than TV,radio or newspaper ads.
Some Closing Thoughts
I’ve seen this sort of thing before with the search engine market.
I believe a similar misunderstanding of the industry is leading to Facebook being discredited much like search engine marketing a few years before.
Also in 2006, AT& T and the Yellow Pages were pitching businesses by saying that Google was used for research and the Yellow Pages were used for purchasing.
Let’s face it: the media, the government, and Wall Street don’t understand innovation or disruption; especially in technology, media, marketing, advertising, and communication products.
We will look back at the naysaying around Facebook’s stock with the same sense of ironic geek humor that we feel towards the statement above. The notion of Facebook failing will be as humorous as the thought of people using the Yellow Pages to buy things.
This blog post was written by David Salinas, CEO of Digital Surgeons. David is an enthusiast and thought-leader in the digital marketing space. He is also a Facebook shareholder. You can follow him on Twitter at @iGrowBrands