Year after IPO, Facebook aims to be ad colossus
NEW YORK — The IPO arrived, and it flopped. Facebook's stock finished its first day of trading just 23 cents higher than its $38 IPO price. It hasn't been that high since.
Amid the hype and excitement surrounding Facebook's stock market debut a year ago, there were doubts. Investors wondered whether the social network could increase advertising revenue without alienating users, especially those using smartphones.
The worries intensified days before the IPO when General Motors said it would stop paying for advertisements on the site. The symbolic exit cast a shroud over Facebook that still exists. Facebook's market value is $63 billion, some two-thirds of what it was the morning it first began trading. At about $27 per share, the company's stock is down roughly 30 percent from its IPO price. Meanwhile, the Standard & Poor's 500 index is up 27 percent over the same period.
The world's biggest online social network has kept growing to 1.1 billion users. Some 665 million people check in every day to share photos, comment on news articles and play games. Millions of people around the world who don't own a computer use Facebook, in Malawi, Malaysia and Martinique.
And much has changed at Facebook in a year. The company's executives and engineers have quietly addressed the very doubts that dogged the company for so long. Facebook began showing mobile advertisements for the first time last spring. It launched a search feature in January and unveiled a branded Facebook smartphone in April. The company also introduced ways for advertisers to gauge the effectiveness of their ads.
Even GM has returned as a paying advertiser.
Facebook is looking to its next challenge: convincing big brand-name consumer companies that advertisements on a social network are as important as television spots.
“We aspire to have ads, to show ads that improve the content experience over time,” Facebook CEO Mark Zuckerberg said.
To achieve those aims, the company has rolled out tools to help advertisers target their messages more precisely than they can in print or on television. Companies can single out 18- to 24-year-old male Facebook users who are likely to buy a car in the next six months. They can target 30-year-old women who are researching Caribbean getaways.
Analytic tools like these weren't available a year ago. But last fall, Facebook hired several companies that collect and analyze data related to people's online and offline behavior. Facebook's advertisers can now assess whether a Crest ad you saw on Facebook likely led you to buy of a tube of toothpaste in the drugstore. Sean Bruich, Facebook's head of measurement platforms and standards, believes the tools are paying off.
“What we can see conclusively a year after the IPO is that ads on Facebook really do help drive people into the store and help them make purchasing decisions, help influence their purchasing decisions,” he says.
People “are getting served ads based on things they didn't put on Facebook and maybe wouldn't be comfortable putting on Facebook,” says Rainey Reitman, activism director at the Electronic Frontier Foundation, a nonprofit civil-liberties firm. Facebook says mechanisms are in place to protect privacy.
“We've never had anything like Facebook,” Reitman says. “We've never had an entity that was able to collect so much information on so much of the world's population, ever.”
“Anywhere that more than a billion people spend time with their friends each month is extremely valuable to us,” says Brad Ruffkess, connection strategist at Coca-Cola.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Highmark to increase premiums, limit access to health care in new plans
- Consol Energy cutting retiree health benefits, phasing out pension
- Oil, gas industry boom leads to expansion of laws in Pennsylvania
- Hospitals, doctors in Pa. received $32M in 5 months from drug, medical device companies
- Canadian company wins bid for casino
- Coca-Cola shaves incentives for executives
- Google Pittsburgh instrumental in fight against hackers, co-directors say
- EPA says greenhouse gas releases from wells, pipelines decline
- New models, China sales key to GM’s future, Barra tells investors
- Truck deals give auto sales a lift
- Bond experts fear inevitable sell-off