1. FACEBOOK
INITIAL PUBLIC
OFFERING
ZENITH SOLUTIONS
ALPHA KAPPA PSI
2.
3. KEY ISSUES
We will provide solutions for the following:
1. Decision between monetizing through
advertisements or third party platform apps
2. Adapting to social media trends
3. Facebook's privacy issues
4. Facebook’s decision to go IPO
5. How Facebook performed since the IPO
4. - Going public
Key - Advertisement & third party
app revenue
Conclusions
- Adapt to social media trends
- Streamline privacy issues
5. COMPANY BACKGROUND
• “Facebook’s mission is to give people the power to
share and make the world more open and
connected”
• World’s largest and most successful social network
• Over 1 billion monthly active users
• 2011 revenues of $3.7 billion come from: 90%
advertising, 10% commissions on sales of virtual
goods by third party developers
7. PROS & CONS OF IPO
• Stock options can be offered to employees
1 Company
PROS
• Increased prestige and visibility of brand
Incentives
• Expand growth through investment
• Finance acquisitions of other companies
• Stability and support over time
2 Long-term
Growth
• Obligated to please share holders
1
Decrease in
Control
CONS
• Centralized around revenue instead of UX
• Need approval of majority of shareholders
• Company is required to be transparent 2
Change in
User Interest
14. HOW WE CONNECT
COMPUTER
97%
94% 2011 | 2012
MOBILE PHONE
TABLET
HANDHELD MUSIC PLAYER
46%
37%
GAME CONSOLE
INTERNET
16%
ENABLED TV
3% 7% 7% E-READER
3% 4%
2% 4%
2% 3%
Mobile
15. TIME SPENT ON SOCIAL MEDIA
(in billions of minutes)
59.5
Tablet
July '11 23.2
4.2
Apps
74 PC
July '12 40.8
5.3
5.4
Mobile
“Facebook’s mission is to give people the power to share and make the world more open and connected.”Company statistic (for example):The company boasts 526 million users who check into Facebook daily (and 901 million who log on once a month)3.2 billion "likes" and comments a day300 million photos uploaded per day125 billion "friend"ships.^^which shows how Facebook IPO is different from typical IPO (fb has established customer base, but has lower growth potential than other fledgling companies who go public)May 18, 2012 IPOWorld's largest and most successful social networkOver 1 Billion monthly users, 600 million monthly mobile users, Median user age: 222011 revenues of $4.27 billion come from: 90% advertising, 10% commissions on sales of virtual goods by third party developersWas trying to avoid IPO, but was inevitable as number of shareholders grew and approached 500
PROSStock in the company can be used in part to finance acquisitions of other companies (i.e. part of the purchase price can be paid in stock).Company stock in the form of stock options can be offered to employees and contractors as a meaningful form of incentive compensation.The company obtains increased prestige and visibility.Management in publicly held companies is generally compensated at a higher level than management of private companies.CONSWhen a company goes public, management loses some of its freedom to act without board approval and approval of a majority of the shareholders in certain matters.Shareholders tend to judge management in terms of profits, dividends and stock prices. This can cause management to emphasize short-term strategies rather than long-term goals.When a company becomes publicly held, the SEC requires it to reveal sensitive information on an ongoing basis, including business strategies, financial results, and executive salaries and compensation arrangements.The company is required to have its financial statements audited on a regular basis.A substantial portion of management time must be dedicated to initial and ongoing reporting requirements of regulatory agencies rather than to management of the company's operations.Control of the company, as well as management positions, can be taken away from existing management if a dissident investor or group of investors obtains majority control.
07.jpg --> the how we connect part shows how mobile tablets are more popular
76% growth in time spent on mobile apps
The world's biggest social network on Wednesday (January 30, 2013) posted a 40% fourth-quarter revenue jump to $1.59 billion and reported its strongest quarterly advertising growth for all of 2012Over the quarter, Facebook's overall ad revenue rose 41% to $1.33 billion from a year ago, with mobile ads making up 23% of the total.In the prior quarter, mobile revenue was $153 million, or 14% of total advertising revenue."Today there is no argument Facebook is a mobile company," said Chief Executive Mark Zuckerberg on a conference call Wednesday.Facebook was making about $3 million per day on mobile ads at the end of the third quarter, and made a little bit more than that in the fourth quarter.Facebook said that as of late December, 680 million users were actively accessing the social app on smartphones every month, up 57% from a year earlier.the mobile advertising business nearly tripled last year to $4 billion and is expected to exceed $7 billion in 2013, according to research firm eMarketerAs of October, 70% of Facebook’s users were accessing the site via a mobile device.
http://mattmckeon.com/facebook-privacy/
Mobile: Facebook must communicate its mobile strategy and how it plans to monetize engagement on tablets and smart phones. Post IPO, Facebook must convey its vision and supporting business models for a single view, but dual platform community.2. Search: To compete with Google in traditional search is fruitless. To compete against Google in social search, where the experiences of friends contribute to an evolving customer decision journey is lucrative. I do believe that search becomes an integrated part of a larger experience where Facebook has the potential to become something along the lines of a personal OS. The idea here is that the right information will find you based on how you curate your network with people, apps, and services.3. RelevanceTo compete for the future starts with competing for relevance. Facebook is trying to stay cool, or more importantly, stay true.4. International http://www.internetworldstats.com/facebook.htm
