Despite what the “experts” are saying, Facebook’s current stock price, which is largely based on the company’s historical and near-term prospects for advertising revenue is a meaningless gauge of its future potential. In fact by 2016 this will all seem laughable.
So let’s look ahead about 4 years shall we. Let’s fast-forward to the state of the Internet Circa 2016. Here is what the future really might hold for Facebook.
The date is June1st 2016.
· Facebook has removed virtually all advertising from Facebook.com as we have all now learned that was just a bridge strategy to appease investors in wake of its IPO
· After advertising was removed from the site usage continued to grow. Now 90% of all Facebook usage is on mobile devices (including tablets).
· Facebook has now amassed 2.5 Billion users worldwide and the social and interest graph has accelerated since advertising was removed. Facebook has created the most powerful database that has ever existed.
· Facebook’s addition of Facial recognition software, telephone integration, commerce platforms, and mobile applications have created an even more robust dataset on its users.
· Three companies (The Big 3) now control over 90% of the digital content that is distributed to consumers in-home and on mobile devices. This includes television.
* At home on iTv / iTunes
* On the road: iPhone
* Tablet through iPad
* Content search through Siri
* Powered by iOS
* At Home: Xbox
* On the road: Nokia (or related acquisition)
* Tablet: HP (or related acquisition)
* Search: Bing
* Powered by: Windows
* At Home: Google TV / YouTube
* On the road: Motorola
* Tablet: ChromeBook
* Content Search: Google
* Powered by Android
· Now 80% of the time while on any computing device consumers are logged into Facebook (up from 40% back in 2012)
· Since Apple broke ground and launched its iTV back in early 2013 television distribution has moved almost entirely to the Internet.
· Since consumers are now logged into Facebook on TV, all television advertising is able to be personalized based on social and interest graphs
· In order to better serve its advertisers The Big 3 have had no choice but to pay Facebook a portion of every advertising dollar it receives to tap Facebook’s powerful database. Facebook is now the “Intel of all advertising” making a cut on every television impression delivered.
· Facebook is no longer responsible for selling directly to advertisers. They are solely focused on building the best possible platform. They have a built in intravenous revenue stream with no end to growth in sight.
· News Corp, Viacom, Disney are all being swallowed up as content creators have found much more value in working directly with distribution channels like YouTube. Traditional television networks have now been replaced by companies that aggregate content and distribute through the Big 3
· Pandora & Spotify are now installed in 75% of all vehicles worldwide both of which pay Facebook a fee for every radio ad they serve
· Facebook’s stock now trading at $1,000 becomes the first $1 Trillion company
Crazy? I don’t think so.
Disclosure: I am a Facebook & Apple shareholder and have current or past business relationships via Mr Youth with Microsoft, Google, and Apple.