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Publisher's Outlook

April 01, 2011

Facebook Gunning for Your Market Share

With a sky-high valuation over $70 billion, Facebook (News - Alert) has to be super-aggressive to ensure it can support a valuation that seems to grow by tens of billions every few months. With the ability to hire some of the best and brightest engineers, it is obvious the company should be exploring a range of new ways to justify its lofty valuation, which is worth about 75% of Cisco Systems (News - Alert).

This past January, I listed the 11 things Facebook should do with its new $1.5 billion, and number two on the list was competing with iTunes/Netflix.  Specifically, this is what I said:

Compete with iTunes/Netflix 

“If everyone is on Facebook all the time, then why wouldn’t they consider buying their media where they live? Hint… They will buy it if you offer it.”

Well it didn’t take that long for the company to respond. Just recently, Facebook said it would be streaming “The Dark Knight” from Warner Brothers, with more movies to come later. Goldman Sachs now says Facebook will be a credible long-term threat to Netflix. Color me unsurprised – I have written recently, it seems Facebook is becoming the Internet.

Number four on the list was as follows:

Develop best practices for Facebook marketing

Every company, it seems, is trying to be a Facebook marketer – and most companies need guidance – perhaps Mark Zuckerberg (News - Alert) and company can assist.

The company has released real-time analytics for social plug-ins, allowing you to track comments like button clicks and other important information, such as demographics. It isn’t best practices per se, but it certainly is a step in the right direction in terms of allowing companies to ascertain how best to leverage social networks.

I still think one of the biggest blockbuster additions to the Facebook product line will be Facebook Ad Connect – a service allowing webmasters to integrate ads distributed by Facebook on their sites based on keywords. This is a major area of vulnerability for Google (News - Alert) and could potentially wreak havoc on Google’s ad margins and non-transparent bidding process, if Facebook plays its cards right.

In the 1990s, investors asked startups what would happen if (when) Microsoft (News - Alert) comes into their space. In the last decade, the name Microsoft was replaced with Google and, in the next decade, it seems new entrants with good ideas will have to worry about both Google and Facebook.

The one crucial point worth noting is speed will continue to be critical and scale must be built more rapidly than ever before, as you could wake up any morning and find one of the Web’s largest companies is gunning for your market share.

Rich Tehrani is CEO of TMC. In addition, he is the Chairman of the world’s best-attended communications conference, INTERNET TELEPHONY Conference & EXPO (ITEXPO). He is also the author of his own communications and technology blog.

Edited by Stefania Viscusi