Posts Tagged ‘profits’

2013: The Drive for Social Profits

StumbleUpon recently announced plans to lay off 30% of its staff in an effort to drive profits.

StumbleUpon is one of the most popular social media services. Now, it is aggressively trying to turn itself into a vibrant business rather than just a popular one.

Is this a sign of the times for social networks? Or did StumbleUpon simply have some operationals issues in a overly competitive field?

Even with a handful of glossy redesigns, traffic (equalling profits) has been the main goal for StumbleUpon. What could StumbleUpon of done to drive both traffic and profits earlier in the game? Did StumbleUpon stumble in creating a viable business.

This really showcases the problem and opportunity that many social networks are experiencing. The opportunity lies in the drive of profits.

This might be the year that social profits take the front burner, where they belong. Having a shiny new toy will not matter if it isn’t making money.

Even the behemoths such as Facebook and Twitter are scrambling to drive profits through a variety of revenue streams.

Some of them will work, some won’t. They will have to be persistant, diligent and creative in how and where they try to make money; that’s just the reality of the thriving industry.

At the very least, 2013 will be a year to watch how social turns traffic into dollars.

 

 

 

Now, the Fun Really Begins for Facebook

social media, facebook IPOAs Facebook rumbles towards its much-anticipated IPO, it is now trading at a staggering $103-billion based on recent trading on SharesPost at $44.10 per share. (Source: Business Insider)

It’s fun to throw around big numbers but there are always stories behind the numbers that tend to be far more interesting and fascinating.

For Facebook, the valuation will carry far more significance when the company starts trading publicly. While Facebook’s valuation based on private trading makes for great blog post content, it will take on a completely different context post-IPO.

To justify the valuation, Facebook will have to rely more on the anxiousness of private investors to get a piece on the action.

It will have to rely on more than ever increasing user numbers, “Likes” and the number of photos shared.

The most important numbers for Facebook’s valuation will be revenue and profit. To justify its current and future valuation, Facebook will have to grow revenue and profits or face the wrath of investors, who have sky-high expectations, and Wall St. analysts, who will be scrutinizing the company’s balance sheet.

Log-out ads, anyone?

What does this mean for Facebook users? The biggest thing is there will be a lot more advertising in different shapes and sizes because Facebook needs to drive advertising revenue.

This will be a big challenge for Facebook because most Facebook users don’t find the advertising that interesting or relevant because they see it as a personal medium. Nevertheless, Facebook has no choice but to drive more advertising, either by showing more of it or hiking prices.

For marketers, Facebook will increase the number of options to reach the 850 million potential consumers for their products and services.

It will be interesting to see how Facebook manages the revenue/profits reality with meeting the needs and interests of its users.

Unlike its pre-IPO days, how much Facebook makes and the rate at which this happens will be the key metric.

For more on Facebook’s IPO, here’s a few links:

Answering Your Facebook IPO Questions (Fortune)

Is Facebook Really a $104-billion company? (Karl Hughes)

Facebook Eyes Big Ad Opportunity from Log-Out Ads (Forbes)