By Paul Morris
Mark Zuckerberg (also known as Zuck) recent FaceBook IPO could have gone better to say the least! It has been plagued by questions over the social networks long term future, ramblings about them inflating the valuation yet allowing some of their ‘inner circle’ into the true value/ challenges they face and then with major companies such as General Motors pulling back advertising due to it not costing in it’s hardly been plane sailing.
I believe Facebook need to stop doing one thing and get three interrelated areas right to justify a multi $billion valuation (I still think the initial valuation was miles away from the true value however I digress). Here goes then…
1/ Wrong investments
Stop investing so much time, money and brain power on areas that do not add significantly to your user experience and do not generate decent £returns.
Areas such as the forthcoming App Store and a possible Facebook mobile are just a distraction and will not generate significant income/ match the brand and expectations hence stop wasting your time on frivolous ventures!
1/ Buy a Browser.
Developing one will take too long hence buy one that is a success in your area of weakness; namely mobile.
Facebook’s revenue poor user is extremely poor when measured from a mobile perspective hence recent talk of buying Opera makes perfect sense. They are strongest on mobile, have a foothold on both Android and Apple Smartphone’s and are valued (before the news broke about a possible purchase) at the bargain price of £860 million. I say bargain as it certainly beats the price paid for Instagram and allows more customer insight and easy integration e.g. pre installed toolbar and optimised user experience with Facebook.
2/ Develop a Search Engine.
I recently blogged about Bing’s Social Search development and believe this to be a great search development. Where Bing will create and refine the experience utilising Facebook data, Facebook can springboard from and launch its own Search Engine.
I have heard on the grapevine that Facebook is quietly working on a new, upgraded version of the site’s search engine. Facebook have reportedly hired former Google engineer Lars Rasmussen who is being aided and abetted by 25 other top engineers. If you therefore couple Bing learning’s with ex Google talent and sprinkle in semantic web algorithm methodology (this time utilising profile, preference and the huge amount of crop-dusting/ human pre screening that has been done across the web with its ’Like’ button ) then you have a powerful Search Engine indeed.
3/ Improve your Advertising Formats.
When you own a large proportion of user engagement (as Facebook already do) and then couple it with the way of doing things (the browser) and the way of searching for stuff (the search engine) you can start to overcome your biggest deficiency; mobile monetisation per user.
Facebook then ‘simply’ need to reduce the number of advertising opportunities (too much supply at present that is not backed up with demand or a large amount of sales/ support personnel) and when the Search Engine hits double digit search market share integrate a Google Adwords competitor.
Not only will that make the Display buy easier (note: Facebook need to move with the banner development times though, particularly in regards to mobile DSP type technology) but also ensure text ads become a viable business model. I would highly recommend Facebook consider environmental factors alongside keyword, profile and behavioral elements in their Quality Score algorithm as that would see them improve engagement rates and ultimately help them monetise their ever increasing mobile user base.