Facebook investors have 3.5 reasons to be happy
An investing disaster? Not really. Here are some reasons to feel good about this stock.
Climb down off that ledge, Facebook (FB) stock owners. The latest data shows some evidence that your buy wasn't such a dumb investment after all. Keep in mind, nobody liked Google (GOOG) either. Here are three pretty good reasons for cheer about Facebook's future, and a fourth fact that, while not so good, may be better than it looks on the surface.
Facebook is very, very large. Facebook is currently the dominant social network in 126 of 137 nations analyzed for a twice-yearly report produced by Vincenzo Cosenza, a digital public relations executive. His latest "world map" of social network usage shows that Facebook has blanketed all of Western Europe, North and South America and North Africa.
Unfortunately, that leaves out China and Russia, which prefer homegrown networks. But it already has even more users in Europe (232 million) than in the United States (222 million).
The viral effect. This is why Facebook stock rose 3% last Friday. ComScore, the Web usage analysis firm, said its latest research indicates that Facebook is an effective vehicle for advertising.
A blog posting by ComScore in advance of the report says that advertisers can experience a statistically significant positive lift in sales if enough people "like" the brand's marketing site or mention a product in a post.
Crucially, ComScore also concludes that an ad can have a latent effect on consumer behavior, even if they only see a display advertisement on a page but don’t click on it. That is, an ad can influence a consumer’s purchasing decision down the road, even without his or her conscious awareness.
This is hardly a news flash. That’s what“brand awareness has been all about since the dawn of the billboard. Nevertheless, executives at media companies everywhere, not just at Facebook, will be dancing in the streets over this one. In the absence of any numbers that suggest that display ads work on the Web, no publisher has ever been able to charge a plugged nickel for anything but a click-through.
ComScore even explicitly criticizes the conclusion of a recent poll by Reuters/Ipsos that Facebook ads, and friends' comments, don’t influence four out of five people who see them.
The Apple effect. Apple (AAPL) revealed this week that it will build Facebook into the next update of its operating system, iOS 6. This will get the site enhanced exposure on iPads and iPhones, complete with a "like" button on iTunes store apps and media.
Apple's motivation almost certainly was a desire to annoy, if not outright damage, Google, its rival in the phone business, which must have wanted its own Google+ to get the favored slot. Facebook is probably cool with that, too.
Zero population growth. And here's the not-so-good news. ComScore reported Monday that Facebook's growth rate has slowed to 5% year-over-year in April, down from a growth rate of 24% a year before.
The simple explanation is that Facebook is running out of people in the world. In the US, 71% of all Web users are already enrolled. That's close enough to everybody -- with a big "if." If Facebook can prove that its advertising is effective, then an audience of 71% of everybody is plenty good enough to sell ad impressions.
Then there’s the mobile advertising business, which has a whole set of challenges of its own that Facebook acknowledges it has not solved.
The company just made the latest in a series of all moves to improve its services for commercial clients: It bought the Pieceable Software team. The company helps developers build mobile applications.
Web week in brief:
Bing adds Britannica
In an act of one-upmanship, Microsoft's (MSFT) Bing has signed Encyclopedia Britannica as the source for key information in its search results. Britannica facts will appear on the page in a distinct format when relevant to the search. Google last month added a similar "Google Graph" display alongside search results. Its source is Wikipedia. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
An app for stress
A team of computer scientists at the University of Portsmouth in England has created an app that is designed to help people manage stress, the BBC reports. The app color-codes incoming text messages so that users know in advance which are likely to have a good, bad, or neutral effect on their stress levels. Then they can choose to avoid, or at least delay, opening the "bad" messages.
Other experts suggested that putting off unpleasant news rarely leads to lower stress levels. Oddly, no one suggested tossing the phone out a window or stomping on it until it breaks into tiny pieces, which might bring lasting stress relief.
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