Facebook IPO: Get ready for a lot more advertising coming your way

Facebook: Set for more advertising

18 May 2012

Facebook’s debut on the stockmarket will result in more targeted advertising for its 30 million UK users, it was predicted today.

The social networking giant has been valued at $104 billion (£66bn), bigger than the combined worth of Ford and Boeing.

The stockmarket float made hundreds of Facebook employees instant millionaires, with co-creator and chief executive Zuckerberg in line for $19.1bn (£12.1bn) - making him the 23rd richest person on earth.

But it also signalled a major change for the UK’s Facebookers as the new shareholders pressure the company to find ways of increasing revenues.

Industry experts predicted that in the coming months users can expect to see an increase in advets on its pages and more advertising targeted at their personal preferences.

Paul Armstrong, head of social for media agency Mindshare, said: “Facebook has a long history of targeted advertising. They know a lot more about us than any other system. The trend that we’re seeing is we are going towards much more targeted advertising.

“I would imagine that what Facebook is going to look to do is make the experience even richer.”

Advertising is particularly expected to be stepped up around users’ music tastes - using information from “like” buttons and Spotify - and according to their location.

Information about marital status could be another opportunity to target advertising.

For example, a woman in Stoke Newington who changes her status from “single” to “engaged” could start noticing adverts for florists and other relevant wedding services in her area.

Analysts also predicted further exploitation of social gaming opportunities.

Tiffany St James, founder of digital company Stimulation Ltd, said the site had the potential to expand its offerings much further.

“Before, it was all about connecting with family and friends but now you can go on there for all your entertainment,” she said.

“It’s not necessarily just the advertising that makes money, but the fact that people can build applications.”

However, the company, which was formed just eight years ago, was warned that it needed to improve the way adverts work on smartphones.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “Around a half of Facebook users access the site from their mobile phones.

“Converting this traffic into income is perhaps one of the company’s largest, and currently perplexing, challenges.

“Facebook was not conceived in the smartphone era and therefore did not have it in mind as a platform.

“It has catching up to do and, if possible, without cannibalising its own current income from the PC space.”

By August, the social network is expected to sign up a billion people — one of every seven humans on the planet, and experts say the share offering is already out of control.

The site’s revenue last year was $3.7 bn (£2.34 bn), up from $153 million (£97m) in 2007, with the majority earned through advertising.

It is the latest in a series of online firms to sell shares to the public in recent months, following online voucher firm Groupon in November and online games maker Zynga in December.