With Facebook’s historic IPO upon us — with a valuation of $104 billion, it's the third highest IPO for a U.S. company, after General Motors and Visa, and it's now worth more than McDonald's, Citigroup and Amazon — the social network's employees have a few challenges ahead beyond how to spend the vast sums of money heading their way.
For a start, Facebook must keep improving the site to better engage users. New research from Attensity, for example, shows that the new Facebook Timeline is a turn-off for many, representing a high risk of customer churn unless the design is improved, even though. One article, titled “Sure Facebook has 900 million users, but its engagement is smoked by these other sites,” argues that “total users is not the only measure of success for a social network.”
Building trust, transparency and ethics will be key to retaining users and reassuring partners and governments. Just because it's going public doesn't mean it doesn't have to worry about privacy concerns.
"There's more pressure because of earnings to push the boundaries a little bit, but they're also under more scrutiny from the European commissions and Irish government," comments Trevor Hughes, president and CEO of the International Association of Privacy Professionals. "They're breaking new ground when it comes to how we use data and how they use data. The answers are not in front of them.”
In the wake of GM's pre-IPO advertising showdown, FB must convince marketers there's a true ROI for allocating budgets to Facebook (beyond "free" social marketing on brand pages). "It's like saying you're not advertising on TV ever again in 1950. Of course you'll advertise at some point. You have a billion people on one platform, you can reach them globally, so of course you're going to advertise at some point,” said Buddy Media CEO Michael Lazerow on CNBC's Squawk Box this morning. “I think what they meant is that right now it doesn't fit into their media mix but eventually they'll be a very big partner to Facebook as a lot of the other car companies are.”
Mark Zuckerberg and Co. are under huge pressure to figure out how to monetize mobile, a concern also shared by rivals Google and Apple. “Facebook, which outshined competition on the desktop with its photo offerings, has dropped the ball with these features on mobile. This is partly due to its friend/foe relationship with Apple,” says Shayan Zadeh, co-founder and co-CEO, Zoosk.
Facebook Credits — the site's payment method for virtual and real-world goods — is seen as a huge opportunity for driving revenue beyond advertising. eMarketer analyst Noah Elkin points out that 90% of Facebook’s customers cross-platforms, generating ad revenue one way or another, so it’s the remaining 10% that Facebook needs to worry about. “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.”
Figuring out China is another top priority. As Fortune notes, “With some 500 million people online, China is the world's largest Internet market by number of users. About half of those users are active on locally grown social networks. It's a vast and potentially lucrative market for Facebook, but for the time being it's likely to remain elusive.” And for the time being, there's champagne to be consumed in Silicon Valley and Wall Street.