Facebook will launch its much anticipated floatation on the stock market this Friday, with the social networking giant set to be valued at a worth of around $100billion. But is this valuation justified?
The site is making a profit, but only in small amounts; Facebook currently makes around £1billion in revenue, which translates to a net income of £312million. Indeed, Facebook themselves have admitted that generating a profit from the site's mobile phone users in particular, who now account for over half of all Facebook users, is an "uncertain" process which "will take time" to master.
Facebook Ads has plenty that will appeal to online marketing bods, not least the sheer size of its audience. Facebook has over 500 million users around the world, half of which are active on the site at any given day.
The biggest appeal of the platform is that you can be very specific with your ads, and ensure you are directly targeting your desired market. For example, if your campaign is aimed at 18 year old males with birthdays on May 18th that like soccer, you can choose to target only these individuals with Facebook Ads.
However, despite these obvious benefits for online marketing campaigns, it seems that many big businesses have not fully decided whether to embrace Facebook Ads or not. Take, for example, the automotive industry.
Only yesterday, it was announced that General Motors would be pulling up to $10million worth of ads from Facebook, claiming that the ads had little to no impact on whether its consumers would invest in their cars. GM said that they would still be maintaining the content on their official page, which of course generates no income for Facebook.
Meanwhile, Ford decided to pump even more revenue into its Facebook ad campaign, with Ford's head of social media Scott Monty proclaiming that their Facebook Ads have been incredibly effective when combined with innovative content.
So, what does this all mean for the future of Facebook Ads? Well, despite its clear and innovative targeting abilities, the lack of substantial revenue and uncertainty from the bigger businesses means that Facebook Ads has a long way to go before it can class itself as a stable business model to rival Google Adwords.