|A Disclosure Dream List for Facebook's S-I |
1/29/2012 @ 1:27PM
Remember Groupon’s pre S-1 days? And then the period immediately afterward? Almost overnight it went from a I-must-have-a-piece-of-this-IPO company, to one roundly mocked for developing its very own performance metric that erased the costs of its marketing. That metric was withdrawn, but the damage was done—analysts and potential shareholders stepped up the questions of whether the daily deal model is sustainable, questions that have not entirely gone away.
Now Facebook is expected to file its first S-1, possibly as soon as this week if rumors are correct. Not that it will follow Groupon’s unfortunate fall from grace—the expectation is that it will be a high-flying stock for some time.
Nonetheless, its S-1 will, as it is meant to, provide insight into Facebook’s weaknesses and strengths. Surely it will look at its profits, the source of its sales, the plans for its horde of cash and of course, the ever-present question of data privacy and how it will satisfy the Federal Trade Commission and European Commission on this subject.
Those issues, though, only scratch the surface of a company whose reach and revenues will soon be equal to a small nation’s GDP, if they already.
Here are some other possible S-1 topics that could help investors as they decide whether and how much to sink into Facebook.
PARTNERSHIPS & FACEBOOK CREDITS
We can almost bank on the S-1 discussing Facebook’s advertising model, how it will diversity this revenue stream and competing social media ad platforms.
But what about partnerships as a revenue source–and no I don’t mean Zynga (whose stock, by way, finally closed higher than its IPO price for the first time last week).
Rather, let’s hope to see more information on the type of partnerships like that with Plink, which just launched a Facebook Credits-based loyalty program that rewards Facebook members for dining and making purchases at restaurants and offline retailers.
These types of deals will lead to Facebook becoming a de facto bank and they can be incorporated into just about any scenario.
“For example, every time you take a poll, watch an advertisement, or tell your friends about a purchase you made, you could receive Credits from that company that would then be redeemable for goods or discounts,” says Brett King, author of Bank 2.0, in another Forbes.com blog post.
Facebook should also give investors a road map about how it plans to continue to expand in emerging and other foreign markets.
The site hit an important milestone this month, comScore recently reported: Visitors to Facebook in Brazil reached 36.1 million–an increase of 192% in the past twelve months–surpassing Orkut as the leading social networking destination there.
Yes, it was a stick in the eye for Google, but it also raises questions about what took it so long. And whether it can replicate its performance elsewhere.
“Brazil currently owns the fifth largest social networking population in the world,” Alex Banks, comScore managing director for Brazil, said. “But despite the cultural affinity for social media, Facebook adoption had traditionally lagged in the market. That has all changed in the past year, during which the site has tripled in audience size as engagement has grown sevenfold to assume the leadership position in the market.”
These are especially important questions as Facebook is on track to reach 1 billion users this year, according to iCrossing. “Facebook’s growth has slowed or stopped in many of its early adopting countries such as the US and the UK,” it says. “However, developing countries such as India and Brazil have shown strong growth with India growing from 22 million users to 36 million and Brazil going from 13 million to 30 million in the last 9 months.”
Millions of potential users in those countries have yet to sign up to Facebook, it said–only 3% of India’s population is currently on Facebook and 16% of Brazil’s. And there is money to be made in those markets for Facebook, its advertisers and of course shareholders.
Case in point: The Express Tribune tells of an Islamabad-based IT company Smart Web and Mobile Technologies which grossed $90,000 in one week from its Facebook app via chat for iPhone.
ITS MOBILE STRATEGY
Speaking of the Facebook app, more information about its mobile strategy would be welcome. If Google+ ever does become a serious rival to Facebook, it will probably be because of Android.
That, at least, is what Paul Allen, founder of Ancestry.com, who has been closing tracking Google+’s progress, recently said. “700,000 Android devices are activated daily…” he wrote. “That number will also grow next year.”
Facebook, of course, has a significant mobile presence as well. Analyst Benedict Evans recently reported that Facebook saw monthly active users of its mobile apps pass 300 million users.
COMPETING WITH LINKEDIN
When it comes to social networks with gravitas, though, LinkedIn, not Google+, is the network Facebook needs to beat.
Last year, a Performics survey of 2,997 active social networkers found that the majority of them (59%) said it is important to have a LinkedIn account, more than any other social network.
Not surprisingly LinkedIn Chairman Reid Hoffman seems to agree. He told the audience at San Francisco’s Web 2.0 Summit last year he isn’t worried about Facebook as a competitive threat. This is how the Los Angeles Times described the encounter:
Asked whether LinkedIn would be held back by its demographic –- the average user is in his or her early to mid 40s –- Hoffman retorted: “You mean, like someone who could give you a job?”
Facebook and the Labor Department announced their collaboration last year via a dedicated Facebook page. The page offers job listings and information about available training programs and educational opportunities. It’s a good start but not nearly enough to compete with LinkedIn in this respect.
MONETIZING ITS NEW ACTION VERBS
This month Facebook rolled out about 60 new apps to be used on its site and threw open its platform to all developers while it was at it. The upshot? A slew of new verbs are expected join Facebook’s “Like” button.
“Soon, there will be apps for all types of interests, as more apps will launch over time,” Facebook’s director of platform Cal Sjogreen wrote in a blog post. “Whether you love snowboarding, gardening, hiking, or knitting, or something else, there will be an app for you.”
More information—or at least guidance–for retailers to monetize these new actions would be welcome. There is already momentum building around the “Want” button, says Greg Links, VP of Sales at Want.
“‘Like’ is often a post-purchase consumer behavior,” he says. “Other than some limited good word of mouth exposure, “like” is a really difficult thing for retailers to monetize.” ‘Want’, however, he says, represents a fundamental change for retailers because capturing online shoppers intent has been notoriously difficult.
“Shoppers who create a wish list or tag something they “want for later” represent a tremendous opportunity for the retailer. They can now deliver very targeted marketing messages, based on intent, which is good for both the retailer and consumer.”