Facebook founder Mark Zuckerberg says Monday's purchase of Instagram isn't likely to be repeated, but Wall Street will beg to differ. As Ben Foster, vice president and digital strategist at Ketchum, notes, "Once a public company, there will be pressure for repeatable profit and revenue growth."
With user growth slowing, one of the quickest ways for a publicly traded company to show quarterly growth is through mergers and acquisitions. We asked Foster and other experts what companies and types of companies would make sense as likely Facebook acquisition targets.
Sponsor
Not surprisingly, one of the most frequently mentioned companies was Path, the semi-private social network. Many of the people still holding out on joining Facebook are those with the biggest privacy concerns, and Path helps address those concerns.
The average Facebook user has more than 100 friends on the social network, while the average Path user has six connections.
"Even Randi Zuckerberg, former Facebook marketing director, refrains from uploading her baby's photographs to her Facebook account. Instead, she shares these photos with her friends and family who are followers on her Path account," said Lori Ford of Amplify Digital Marketing Group.
Facebook would probably face an immediate backlash from hardcore Path users, many of whom fled to Path to escape Facebook's all-intrusive and ever-changing privacy policies. The company can make good on promises to leave Path as is by setting a good example with how it handles the Instagram integration.
Short-Term: Focus on Advertisers
Strategically, Facebook needs to find a way to compete with advertising heavyweight Google. Right now, Facebook simply doesn't provide the same kind of analytics Google offers its advertisers, leaving big and potential Facebook advertisers frustrated with the end-to-end experience, Foster said.
"Facebook should learn from Google and acquire companies that provide this information to customers. Google acquired companies like Applied Semantics, Urchin and Doubleclick to provide free tools to customers to clearly show the value of advertising on Google," Foster said. "Facebook would benefit from an analytics suite that goes beyond 'new likes' and 'talking about' to show marketers exactly how users are behaving on Facebook, how they can effectively reach them, and then how they behave once leaving Facebook on a company's .com."
Long-Term: Focus on Users
Facebook's ultimate success depends on the quality of the user experience, and the quality of the user experience is most closely tied to the News Feed. Facebook's purchase of Instagram showed a commitment to finding ways to generate and offer quality content. Going forward, Foster said, it will need to find ways to make sure the content in the News Feed is relevant.
"By acquiring companies that can analyze a user's social graph to determine the best content to display to them, Facebook can continue to provide a compelling user experience through a personalized content stream," Foster said. "With a more relevant news stream, users will feed more [likes and comments] into Facebook... allowing them to strengthen the algorithms to a point that would be difficult for any competitor to replicate."
Image courtesy of Shutterstock.
Discuss
0 comments:
Post a Comment