5 Ways Facebook’s IPO Affects Brands
By Dave Kerpen
Facebook expects to raise as much as $16 billion through its IPO, securing its title as the largest tech IPO in history. Naturally, consumers are questioning whether they should buy shares and financial analysts are in a tizzy evaluating the company’s worth — likely valued at more than $100 billion.
But the real $100-billion question is this: What does Facebook going public mean for brands? Here’s the answer.
1. More and Better Ads
To ensure its stock price doesn’t fall and investors stay satisfied, Facebook has to experience significant and continuous revenue growth. To accomplish this, the platform is setting its sights on advertising dollars. That means a certain aggressive push for Facebook ads. Like its recent logout page ads and sponsored stories, Facebook will continue innovating in advertising with new ad formats and targeting capabilities. It’s a big win for marketers, giving far greater reach and hyper-targeting abilities. So get ready to hone in on your perfectly tailored audience.
2. Less Organic Traction
With a greater focus on ads, it will become increasingly more challenging for brand managers to fuel organic growth. Valuable, engaging content will always be vital, but without content working hand-in-hand with Facebook advertising, your brand will be unable to keep up in the social space. The days of brands getting significant traction on Facebook organically are over.
3. Additional Ad Money
Facebook’s IPO has been called a “watershed moment” for the industry. That’s because it truly legitimizes social media for businesses. As a result, C-level executives are going to be putting more money toward social media and marketing. There won’t just be more financial investment in Facebook, but more marketing investment, giving brands and marketers more opportunities to leverage social media the right way.
4. Diverse Buys
After an influx of cash, Facebook will have the ability to continue its spending spree and buy more tech companies to aid its commitment to sharing. (such as its recent $1 billionpurchase of Instagram) By acquiring such sites — Pinterest, or Quora, perhaps — the platform will be able to expand features and grant greater opportunities to share content from Facebook alone. What does that mean for marketers? You can look forward to potentially streamlining your social media marketing plans. That would mean buying advertising on Facebook and Instagram together, for instance.
5. Fewer Changes
One of the greatest challenges for marketers using the Facebook platform has been the need to be agile, given Facebook’s constant updates to its products for users and brands. As a public company, Facebook may become less inclined to change its products as quickly as it has in the past. This means marketers and brands might be able to create opportunities for customers using Timeline, for instance, without worrying about Facebook’s next dramatic shift.