Cashing Out: Week of January 29th – February 4th 2012 in Online Marketing News

It’s official: Facebook’s $5B IPO filed

As anticipated, Facebook finally filed for its much-hyped IPO February 1 – one that could set the company’s valuation somewhere between $75 billion and $100 billion, the New York Times (NYT) reports.

According to Econsultancy, the company is looking to raise at least $5 billion as it works towards its public offering, though that number could reach as much as as much as $10 billion “if it sees strong demand.” Needless to say, with a list of underwriters that includes Morgan Stanley, JP Morgan Chase, Goldman Sachs, and Bank of America, among others, Facebook’s is shaping up to be largest web IPO we’ve seen yet.

“Facebook’s I.P.O. marks another stage of the Internet’s evolution,” Charlene Li, Founder of tech consulting firm the Altimeter Group, told the NYT . “It’s so valuable, because it’s not just about content, it’s about our connections.”

Naturally, there are many reasons why investors should be excited for this public offering. As Econsultancy noted, “it appears Facebook has avoided using goofy accounting metrics that would put ‘hair’ on the deal,” and the company doesn’t seem to be inordinately dependent on Zynga, as some had presumed. 12 percent of Facebook’s revenues come from the game developer, a considerable amount, to be sure, “but perhaps not enough to lose sleep over,” says Econsultancy.

However, even with an IPO as highly anticipated and highly valued a this one, there are risks to consider.

Facebook has already run into problems with the FTC over privacy issues, the NYT notes, and there’s also the fact, unsettling to some, that Mark Zuckerberg will continue to have control of the company following its IPO.

Finally, there are questions as to just how much further Facebook can continue to grow, and just how far the limits of sharing can be pushed.

“With sharing at the center of Facebook, and the new Web,” the NYT writes, “analysts […] wonder whether the constant chatter will create too much white noise.”

Nevertheless, the announcement is one of the biggest pieces of news to come out of the tech industry in the past decade, and investors and industry observers alike are sure to be watching closely as it develops.

Sales up and profits down in Amazon’s Q4

With the release of its fourth quarter earnings report January 31, Amazon had a lot of growth to boast about.

Over the past year, almost every area of the company saw growth in the double digits, Mashable noted, with net sales reaching $17.4 billion (up 35 percent,) and sales for third parties growing by 65 percent. Sales for the Kindle were up by an impressive 177 percent.

But the fly in the ointment here is that profits are down.

Though Amazon’s press release highlighted the company’s growth in many areas, as well as the near tripling of Kindle sales over the holidays, the company missed Wall Street’s expectations and, due to a lot of spending their income has actually decreased.

According to TechFlash, in the fourth quarter, Amazon’s net income dropped by 58 percent, to $177 million. That figure is slim compared to the company’s $416 million net income in the fourth quarter of 2010.

Meanwhile, the company’s operating income also dropped, to $260 million this past quarter from $474 million at the end of 2010.

Not surprisingly, the news has taken a toll on the company’s stock value. The New York Times (NYT) reported that “shares of Amazon, which rose $2.29 to $194.44 on Tuesday, immediately slumped in after-hours trading by $18.”

One analyst  who spoke with the NYT, BGC Financial’s Colin Gillis, was unimpressed with the company’s earnings report, chiding:

“With the valuation Amazon is carrying, you got to perform […] You’ve got to be like Apple — smash through the numbers people are afraid even to whisper. Instead, they’re only making slightly over a penny on every dollar in revenue. That’s pathetic in any industry.”

But not everyone agrees that the company’s stock will be affected for very long. Morgan Stanley’s Scott Devitt told the Times that, though investors might avoid buying Amazon stock for the next few months, “the long-term story is very much intact.”

YouTube pondering subscription service for niche content channels

According to YouTube CEO Salar Kamangar, the difference between a $2 CPM and a $20 CPM may lie in the way videos are served up to users.

In interview with AllThingsD’s Peter Kafka January 31, Kamangar said the company is toying with the idea of launching a subscription service for niche content channels on YouTube, which would give users access to a continuous flow of content related to very specific interests.

According to Ad Age, “Mr. Kamangar seemed to indicate that the investment in new YouTube channels was as much about branding — or rebranding — to meet advertisers’ needs as it was about creating content that consumers really and truly want to consume.”

Whereas a video of a dog riding a skateboard might ordinarily command a $2 CPM, Kamangar believes that same video, repackaged as part of a niche content channel, could command as much as a $20 CPM. His argument? “How you brand and package matters.”

Launching a subscription service is one way that YouTube could diversify its dependence on advertising, says Ad Age:

“If or when YouTube creates a subscription model, do not be surprised to see the company look to second- or third-tier cable networks to start offering their programming on YouTube on an a-la-carte basis.”

And though, Kamangar certainly concedes that such an idea is by no means assured to work, he’s willing to take the gamble.

“[It’s] very difficult for any of us [at YouTube] to predict what will be successful,” Mashable quoted him as saying, though he added “we’d rather be early than late.”

Google+ reaches 100 million users

According to analyst and self-proclaimed “Google+ unofficial statistician” Paul Allen, Google+ should now have hit 100 million users.

In a Google+ blog post, Allen predicted the fairly newborn social network would reach 100.8 million users by the evening of February 1, and, in a separate post, forecasted that the network will have 400 million users by the end of 2012.

Mashable, which reported on Allen’s predictions, suggested some of factors that may account for Google+’s current growth. Among them, allowing teens to join the network, as well as Google’s recent social search integration, Search Plus Your World, are the main contributors.

But Mashable also suggested that some of that growth could be the result of competitor Facebook’s actions of late, and not just its own:

“Facebook’s recent moves may have also prompted some to check out the platform. For example, the company’s introduction of Timeline has rankled some users.”

Zynga stock surges in wake of Facebook IPO filing

We might have seen this coming.

Zynga, the game developer that does so much of its business on Facebook saw a boost to its stock value February 1, following the announcement that Facebook had filed for a $5 billion IPO.

As TechCrunch reported, in the two days following the revelation that the company was responsible for 12 percent of the Facebook’s total revenues, Zynga stock jumped over 26 percent, with shares hitting $13.39 at market’s close February 3.

“This is far more than most analysts had previously projected,” writes TechCrunch “The ones who began covering Zynga after its December IPO had pegged its stock well under ten bucks,” though, following the company’s quiet period, the main underwriters for the Zynga IPO projected the share price to rise to between $11 and $14.

Android Market gets malware ‘bouncer’

In an effort to deal with the problem of Android malware, Google will be introducing an extra security layer to the Android Market, TechCrunch reported February 2.

In a post on the Google Mobile Blog, Hiroshi Lockheimer, Android’s VP of engineering, described the new service, code-named ‘Bouncer.’ Mostly automated, Bouncer immediately scans applications for malware, spyware, and trojans, as soon as the app is uploaded.

An added feature, says TechCrunch is that, since  Bouncer isn’t 100 percent automated […] once something is flagged, there’s a manual process for confirming the app is indeed malicious, reducing the risk of false positives.”

But what TechCrunch underscores as Bouncer’s biggest benefit is that “previous [malware] offenders will have a much more difficult time sneaking back on to the platform by registering under a new name, since Lockheimer’s post promised “we also analyze new developer accounts to help prevent malicious and repeat-offending developers from coming back.”

Amazon acquires TeachStreet

Coming a a surprise to some, Amazon’s latest acquisition is Seattle-based online marketplace TeachStreet, a service that matches students with teachers.

According to a February 2 GeekWire article, the deal is “looking very much like a ‘talent acquisition,'” with TeachStreet shutting down its service February 15 and with its staff already joining Amazon’s daily deals service AmazonLocal.

TeachStreet founder Dave Schappell did not specify what kind of work the TeachStreet team will be doing at AmazonLocal, saying only that he’s excited to be “working on things that millions of people use.”

TeachStreet hit a difficult time last year, with the introduction of Google’s Panda algorithm, which severely injured the service’s traffic.

Following such challenges, Schappell says “End of the day, I believe this is by far the best result for us […] this is really good. We stay here. We know the team, and I know Jeff [Bezos’] appetite for investing massively in businesses, so it is exciting in that way.”

This week in marketing studies and reports:

Ad spend on Facebook growing faster than paid search

According to digital marketing software company Kenshoo, marketers’ ad spend on Facebook is growing much more quickly than their spend on paid search advertising.

Kenshoo found that spend on Facebook ads grew by 109 percent between the third and fourth quarters of 2011, as compared to a growth of  just 27 percent in paid search on a quarter-over-quarter basis.

Mobile apps and QR codes top list for marketers budgets in 2012

A February 1 report from Econsultancy showed that, when it comes to investing their budgets, marketers will be focusing on mobile applications in 2012.

While 57 percent of businesses and 67 percent of agencies said mobile apps were their top priority for the coming year, QR codes followed close behind, the second highest choice for both categories.

Another item of interest, the report found that “45 percent of companies [are] increasing overall marketing budgets but only 16 percent [are] saying the same for ‘traditional’ marketing budgets.”

Valentine’s day spending to grow by 8.5 percent since 2011

Surveys from the National Retail Federation and from American Express predict that consumer spending on Valentine’s day this year will exceed the figure for last year, hitting  $17.6 billion total spending, up 8.5 percent from last year.

DailyFinance quoted Melanie Backs, Manager of Public Affairs for American Express, who said:

“Consumers have been consistent in saying they have a little more spending power, despite the uncertainty of the economy […] We’ve seen this in our surveys over the last few months – from Halloween to [the] holidays and even travel – and Valentine’s Day is right in line with that trend.”

About Emily Wilkinson

Emily Wilkinson is a Montreal writer and editor who recently joined Her experience comes largely from her work at print publications like La Scena Musicale, where she alternated between positions as content manager, copy editor and journalist.
She believes in the importance of strong writing, be it in journalism or in other media, like blogging or even social networking. Her prerogative: though language will and ought to evolve, a good writer need never sacrifice the communicative power of text that is written with thought and care, whatever the venue.
Find Emily on Twitter @EditorWilkinson

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