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Tom Simonite

A View from Tom Simonite

Five Hints on Our Facebook Future

Based on its pre-IPO video, expect more ads, changes to its mobile offerings, and a world where all software links to Facebook.

  • May 4, 2012

As Facebook heads for an expected $100 billion debut on the stock market two weeks from today, many users of the site may be wondering what this means for their experience of the social network. The 30-minute “retail road show” video made public by Facebook yesterday to tempt investors gives some clues. Here are five of them.

1. Your like button clicks make ads more valuable. If you “like” a business on Facebook, the company will sell ads to them that show up on your friends’ pages to say that you did so. Sheryl Sandberg, Facebook’s chief operating officer, says people are 50 percent more likely to recall an ad with that “social context.”

2. Facebook may start selling more than just purple cows. The social network has its own currency called Facebook credits, mostly used by companies like Zynga to sell virtual goods in games, that pulled in $500 million in revenue for Facebook last year. “In the future, we may seek to extend our payments into areas outside of games,” says CFO David Ebersman, “but with Facebook likely keeping a lower revenue share than 30 percent in areas where developers costs are higher.” Digital content such as movies and music would be a good fit with Facebook’s ability to let you see what friends are doing.

3. Expect more ads and other changes in Facebook’s mobile app. Mobile usage of Facebook is growing extremely fast, but the majority of the company’s ad business comes via its website. Sandberg said that ads that appear directly in your stream of updates on friends, known as “sponsored stories, would fix that, claiming that “they become a really natural part of Facebook’s mobile experience.” Ebersman warned investors the company would spend money on improving Facebook on mobile devices even if revenue didn’t immediately improve, so everyday users should expect significant changes.

4. Facebook doesn’t have a billion users yet. Only(!) 900 million people use Facebook every month, the video says, with 488 million using the mobile app or site every month. Each day, 525 million people use Facebook in some way.

5. Mark Zuckerberg thinks Facebook becoming unavoidable will make the world more open. “Facebook’s mission is to make the world more open and connected,” the company’s founder explains at the start of the video, going on to enthuse about improving our access to information on all scales from global events to personal friendships. Later, he explains that before long every piece of software will rely on Facebook. “If you think five years out, using Facebook doesn’t just mean using the Facebook app or software that we’ve written ourselves. I think that we’re gonna reach this point where almost every app that you use is gonna be integrated with Facebook in some way,” says Zuckerberg. His closing pitch to investors also carries a message to people that use Facebook and those that don’t: “We make decisions at Facebook not optimizing for what is going to happen in the next year but what’s going to set us up for this world where every product experience you have is social and that’s all powered by Facebook.”

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