Dr Mariann Hardy, social media expert and academic from Durham Business school examines Facebook’s future ahead of Friday’s IPO: Is Facebook a good investment?
There is a history here going back to the first Dot.com bubble in the late 1990s that rightly adds significant concerns about the Facebook valuation, as much as $104.2 billion, for what is perceived as just an ‘online’ company. The market price for Facebook concerns many investors who are worried and/or have a skeptical view that is based only based on a very short-term snap-shot of Facebook’s current position and the future financial coordination of the company as a growing-concern.
These concerns are based on Facebook being more a friend-flash than actual hard investment. And investors do not have to look much further in terms of social network failures, including MySpace and FriendsReunited.
Is Mark Zuckerberg experienced enough to be chairman and CEO of a $90bn company?
Mark Zuckerberg clearly has a natural flair for business and as a digital native is best placed to be CEO of a platform that is more than an online social network and reflects a particular ‘lifestyle’, if not an everyday source of communication with friends. One could argue that Zuckerberg’s experience is considerably more than most CEOs as he has ‘grown-up’ and lives through his own digital profile.
Can Facebook sustain its profits growth?
Facebook’s unique user growth has slowed considerably (see PEW for latest stats); however, its profits and marketing activity continue to increase. In terms of profits, we (the audience, the users, the investors) have yet to see what the profit margins are. I am convinced that there has to be some tangible indication from Zuckerberg that shows sustainable growth and profits over time before investors will feel confident in Facebook’s long-term activities. ‘Growth measures’ – this is the right message for Zuckerberg to deliver as part of his commercial portfolio.
How quickly will Facebook deliver advertising to mobile users?
There has already been some speculation about not IF, but WHEN Facebook might launch mobile advertising. Another view is that Facebook will set up its own advertising platform to market to other sites and drive content from its near 900 million users.
This kind of ‘smart’ mobile advertising reveals another route through which Facebook could commercialise its platform and in doing so Facebook could become the third party on other social platforms and networks – much the same way that Google is.
Facebook is carefully crafting complementary commercial investment both at an internal platform level and external digital and socially prompted advertising.
So for Facebook the long-term game is about unique users, unique content and unique marketing.
Is Facebook at risk from the next social media phenomenon?
It would be naïve to say no, but I expect that Zuckerberg considers himself to be ‘restless’ in the world on of social networks and will continue to be a part of the cutting edge of future social media phenomenon. In addition, the latest phenomenon – Instagram – was simply bought out by Facebook.
Here the tone of commentaries on social media has been one of excitement, wonder and outright necessity. Levels of mobile phone usage have made social exchange via these technologies inescapable. This situation has made choices to opt-out of such systems potentially more desirable, but also increasingly more difficult. At Durham we have just finished research into the beliefs, decisions and practices of individuals who have made active choices to reduce their reliance on mobile phones, the internet and social networking systems – in particular the active choice to disconnect from social networking sites (SNSs) and Facebook.
Is privacy an issue for Facebook’s long term success?
Copyright and how to resolve legislation around the sharing of tagged content across a very public setting is a major concern for the company and some users.
Some see Facebook as an additional means of social exposure and it is important for the company to consider how it deals with breaches of copyright and privacy– or the ‘dark side’ of social network sites (SNSs). My own research, on how people connect and interact , highlights privacy is an on-going concern in the world of social media.
For more information please contact Andrew Adam or Alistair Scott, Broadgate Mainland, 020 7726 6111
About Dr Mariann Hardy:
Dr Mariann Hardey is newly appointed to the Marketing Group at Durham Business School and is also Associate Director of the Centre for Communication Science. She is a social media professional and academic and the BBC North East commentator for social media and digital networks.
In her work Mariann seeks to identify and understand how real social relationships are mediated through digital social networks and Web 2.0 applications. Mariann is a member of a new generation of academics and researchers who have not only grown up with digital technology, but are pushing new research boundaries and thinking futures through them.