Facebook is about to raise billions on the stock market. For its millions of users, the social network site is an important source of information and fun. But for many companies Facebook has become virtually indispensible. Will the stock market flotation change all that?

Maintaining friendships, sharing photos, clicking 'like' in response to an entertaining comment: it’s become a staple of many Facebook users’ daily lives. But in recent years Facebook has also become one of the most important marketing tools on the planet. Many companies rate their popularity based on how many Facebook fans they have.

How did Facebook achieve all this? Technology entrepreneur and media expert Ruud Hendriks thinks the answer is simple.

"It’s largely down to the realisation among advertisers that recommendations from people you trust are becoming increasingly important in advertising. It used to be all about selling your company in ads, but now it’s more important that people tell their friends: I use this product, you should too. Facebook is the ideal medium for that kind of message."

Fun campaigns
Plenty of Dutch companies understand this shift. Major players such as HEMA, KLM and Heineken are very active in promoting fun campaigns or special offers on the social network. KLM airline is running a ‘social seating’ project, which enables passengers to choose who they sit next to on a flight.

At the end of last year, the Heineken beer company even entered into a joint venture to launch its ads through Facebook. Heineken already has almost 5 million Facebook friends. Floris Cobelens, Global Head of Digital at Heineken, reckons it’s not just about those friends, but about the 250 million friends of those friends. "We are only beginning to discover the possibilities," said Cobelens last year at a conference on digital branding.

Click like
Facebook’s importance and potential for such businesses is huge. A 2011 Webtrends survey revealed that visits to brands’ corporate websites are declining, while visits to their Facebook pages continue to rise. In a single month, over 20 million people 'liked' Coca Cola button on Facebook, while a mere 270,000 people visited the company’s website.

But smaller businesses seem to be hooked on Facebook too. In fact, Amsterdam-based company Kudoo focuses on nothing else. Kudoo specialises in ‘social gifting’: Facebook users can give each other presents on the site – everything from watches and salsa classes to chocolate bars and socks.

Kudoo’s director Erwin van Kralingen believes Facebook is the ultimate place for a company to earn money in this day and age.

"All your friends are on there, and the first thing they do when they start their computer in the morning is check Facebook. Many investors and companies see Facebook as a new channel."

Testing the water
For brand new companies, Facebook can be a good way to see whether your wild business plan has a chance of succeeding. Businesswoman Mariëlle van der Loo, for example, wondered if her plan for a webshop selling lingerie for women with large breasts made good commercial sense.

"I set up a Facebook page, posted a number of small ads and asked women to reply. The response was enormous. Within six weeks we had 1,000 followers."

That was the proof she needed that her company had the appeal to survive. This week sees the launch of her online shop, annadiva.nl.

Lucrative flotation
Facebook is about to embark on a stock market flotation. The venture will probably involve no more than 5 or 10 percent of the company, but is expected to raise at least 5 billion US dollars. That’s good news for founder Mark Zuckerberg and a large number of Facebook employees who are likely to become very wealthy, very soon.

But companies active on Facebook are unlikely to reap any rewards in the short term, predicts internet marketing expert Joost Geerts.

"Wait and see what the next five years bring. Consumers might weary of being inundated with information all day by friends and businesses. Or perhaps there’s a Chinese hacker out there tinkering with something new that will soon make Facebook seem like yesterday’s news."

Then again, Facebook in its present form – with a 'mere' 845 million users out of 6 billion earthlings – may only be the tip of the iceberg.
 

(dd/rk)