Facebook enters next stage

17 January 2012

PALO ALTO: Facebook is seeking to create a "strong business" that will satisfy marketers and users with equal success as the social network enters the next phase of its evolution.

The company is widely anticipated to pursue an initial public offering in the near future, and Mark Zuckerberg, its CEO, argued the shift from being a "product" to a major corporation was profound.

"We need to build a really strong business, and that means we need to serve that class of partners well on the marketing side, build good products for them and appreciate that we need to grow at a certain rate to attract the kind of people we need to keep attracting," he told the Wall Street Journal.

Recent initiatives in this area have included forming a "client council" featuring executives from Coca-Cola, Diageo and McCann Worldgroup, as well as efforts to support and inform best practice.

Although the platform's overarching "mission" is still to connect people, Facebook is expanding into diverse areas such as geo-location mobile services and establishing tie-ups with media owners.

It has, however, received criticism for its privacy policies, demonstrating what some observers see as a fissure between user perceptions and making money, but Zuckerberg suggested these processes can proceed together.

"It's not mutually exclusive. Serving more people, increasing your customer base and making them more deeply engaged is by itself good business," he said. "The best way for Facebook to work is do exactly what people want."

Zuckerberg cited the example of Amazon, the online retail giant, as one organisation which successfully took a long term perspective, meaning its viability and potential were subject to heavy questioning.

"Because we focused so much over the past five or six years on building things that are going to have lasting value for people, I think we have a good shot at that," he said.

According to projections from eMarketer, the insights provider, Facebook's advertising sales hit $3.8bn in 2011, versus $264m in 2008. This figure was pegged at around $6bn in 2012.

While gaming firms like Zynga and Playdom have shown it is possible to generate revenues via Facebook, this trend has not been universal. Zuckerberg thus asserted monetising the site must be secondary to encouraging sustainable demand.

"Maybe there will come a time down the road when most of the industries we think should be social are already social and the primary thing we can do is optimise the amount of money we can make," he said.

Data sourced from Wall Street Journal; additional content by Warc staff