Facebook this week has announced plans for a stock market flotation and is aiming to raise $5billion which, although in many people’s minds may sound enormous, is a lot less than many experts predicted.
But why is the world’s largest social media network so valuable? With over 700 million users worldwide this week’s announcement has meant that we have been able to learn more about Facebook, including discovering that last year it made an astounding profit of $1billion.
Facebook’s Founder Mark Zuckerberg has said himself that Facebook was not created as a business but more as a social tool to help people connect more, but with such a huge profit mainly generated from online advertising, this is one business model that is proving to be a success.
With the flotation Facebook is set to keep growing which will create even more opportunities for businesses to use this medium to directly contact prospective customers with targeted and tailored adverts.
As the BBC puts it "As …Facebook… is not a paying service, you are not the customer, you are the product," so social media advertising gives businesses the chance to directly target niche groups of people with tailored adverts (eg wedding venues in Cheshire targeting women who turn their status to engaged).
With businesses needing to find new and better ways to increase their customer base, Facebook is an invaluable tool. So maybe that multi-billion valuation doesn’t seem so outlandish now.
As a Cheshire PR agency we look after a number of social media campaigns for our clients, including one for fashion website go-style, so will be monitoring any changes Facebook makes over the next few months very closely.
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