Why Buy Facebook Stock
May 18, 2012
I can’t tell you how many times I’ve been asked the question, in the past week, “Are you buying Facebook stock?” The short of the answer is Yes, but while I have you, I’ll tell you the long of it.
Why Buy Facebook
- Facebook has permanently changed the way we interact with the world and document our lives.
- With more than 800M “social” users world wide and 1 n 2 Americans on Facebook it will continue to be, overwhelmingly, the #1 website online.
- Facebook surpassed Yahoo last year as the number one display ad selling company in the country, cha ching!
- Facebook pages is a pivotal platform for businesses to connect with their consumers and that offers Facebook a tremendous opportunity for non-traditional revenue streams with companies like GM (Invested 3xs the amount in “unpaid marketing” vs “paid advertising” on Facebook, to the tune of $30M).
- Facebook has the most intuitive self-serve advertising platform of any ad delivery company which means it is a very attractive medium for small businesses and has proved it by becoming the largest ad-display site.
- It has the most accurate targeting for Demographics, Psychographics, and Geography because users publish this information.
- CPMs and CPCs are still cost effective compared to other highly targeted online advertising mediums.
Forecasting Facebook’s Future
- Facebook needs to clear the air with user privacy issues as this could be their achilles heel, especially now that they are publicly traded and they have a lingering $15B law suit.
- Like Google, they need to take a deep dive into revenue opportunities on mobile devices.
- With Zynga making up 15% of their revenue, they need to figure out how they will separate peacefully (whatever that means from a behind the scenes POV)
- Instagram will likely be positioned to compete with Flickr. Category tagging is an inevitable update as the web version of Instagram comes on the scene. Instagram needs to rival Flickr on the SEO and meta data publishing end of the photo sharing business.
- I also see Instagram becoming more aligned with Facebook pages on the B2C side of things. (not sure what that means yet but ponder it from a marketing angle)
- Facebook is going to open up in the SEARCH space by creeping in with subtle updates. With all of the relevant data, how can it not?
If you have more insights, forecasts or opinions then leave them in the comments below.