Why the Facebook IPO Might Produce More Tears than Smiles
As Facebook heads for its IPO and a valuation which, according to some analysts might be worth over $100 billion the question has to be whether it can, as a mature product rather than a startup, deliver the kind of value that will justify its flotation.
The jury on that one is still out and the reason for this lies in Facebook’s very own recipe for success. Namely the social graph. In my latest book, The Social Media Mind there is a chapter where I examine the importance of the Interest Graph versus that of the Social Graph and explain how the latter is of far greater value to companies, marketers and advertisers than the former.
Evidence that this is exactly what is happening is now at hand from a Bloomberg report which reveals that conversion of fans to shoppers in the Facebook environment has been less than encouraging for many of the popular megabrands Facebook members like to befriend.
The report cites the disappointing experience of brands whose pages number millions of fans and whose Facebook sales have been so discouraging as to force the closure of many Facebook Stores just months after they were opened.
Facebook has become the world’s largest social network because it is the place where you go to hangout with your friends and the people you know. Its social graph, which made it so easy for people to connect with friends both current and past, is also making it difficult to take seriously as an ecommerce environment. It stands to reason that when you log on and chill with some buddies online what you do not need more of is someone trying to sell you something.
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