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Inside Facebook

Inside Facebook

Lawsuits and regulatory investigations turn IPO into a black eye for Facebook, underwriters and Nasdaq

Posted: 23 May 2012 06:05 PM PDT

Facebook, its underwriters and the Nasdaq exchange continue to face scrutiny over the company's $16 billion initial public offering, as a number of investors have filed lawsuits and regulators have called for investigations.

Facebook's stock closed at $32 today, up more than three percent since yesterday but still down from its $38 IPO price. Here we'll recap the two main issues causing this onslaught of controversy and discuss what has happened so far as a result.

First were technical issues with the Nasdaq, which many claim led to botched trades on Friday when Facebook went public. The exchange had said it would set aside $13 million to cover compensation costs, but Nasdaq OMX Group was then sued on Tuesday by an investor claiming the exchange was negligent in handling orders for Facebook shares. Nasdaq representatives now say that if they had fully realized the extent of the technical problems they faced, they would have delayed the IPO. Facebook is reportedly getting pitches from the New York Stock Exchange to switch its listing.

The other controversy involves underwriters Morgan Stanley, JPMorgan Chase, Goldman Sachs and others, as well as Facebook itself. Reports claim underwriters' analysts reduced their earnings projections for the social network during the company's roadshow, but did not make the change widely available to potential investors. According to Reuters, the banks are now forecasting 30.4 percent year-on-year 2012 revenue growth on average, instead of the 36.7 percent growth previously expected. In 2011, Facebook’s revenue grew 87.9 percent year-on-year to $3.71 billion. Another report says Facebook executives were involved in suggesting analysts revise their estimates.

As such, lawsuits have been filed in New York and California on behalf of investors who claim they had a legal right to know about the lower growth forecasts before the IPO. The underwriters, Facebook and its executives are listed as defendants in these suits.

According to Reuters, the U.S. House and Senate committees that oversee financial sector matters are planning to look into the allegations — as are the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Massachusetts Commonwealth.

Morgan Stanley said in a statement Tuesday that it "followed the same procedures for the Facebook offering that it follows for all IPOs." Facebook did not provide comment about the regulatory inquiries, but regarding the lawsuit, spokesperson Andrew Noyse said in a statement, “We believe the lawsuit is without merit and will defend ourselves vigorously.”

Facebook to sell premium ad placement through Ads API, Power Editor

Posted: 23 May 2012 03:34 PM PDT

Advertisers will be able to buy premium ad inventory — on the home page and within News Feed — through the Ads API and Power Editor tool rather than working directly with a Facebook ad representative, the social network tells us.

Although the functionality is not yet live, this could allow third-party ad companies like AdParlor, Buddy Media and TBG Digital to continue to serve high profile clients who want more prominent ad placement that wasn’t previously available through the API. It also means Facebook may be able to better scale its premium advertising product without having to greatly expand its own staff.

Many advertisers feel Facebook does not have enough employees taking the time to address their individual business needs. The competition among third-party providers may lead these companies to be more attentive and an increasingly ideal alternative to working with Facebook directly. According to the Preferred Marketing Developer directory, there are 44 companies with access to the Ads API. The Power Editor, a self-serve desktop tool with advanced functionality, is available to some advertisers who request it from a Facebook representative.

In February, Facebook announced new premium ad offerings, including mobile Sponsored Stories, Reach Generator and logout ads. At the time it was unclear how this would affect third-party ad services and software providers, who only had the ability to buy ads that ran within Facebook’s right-hand sidebar. We do not have details on whether all of these premium options will be available through the API or Power Editor, but Facebook tells us it is working on this with developers and agencies now.

[Update 5/23/12 4:16 p.m. - Facebook confirms to us that it will only give third parties access to premium homepage ads within the feed and right rail, not mobile inventory. Logout placement and Reach Generator services will also still need to be managed by a Facebook representative. Since these are newer offerings, the social network is likely looking to manage these ads more carefully.]

Example premium placements soon to be available through the Ads API and Power Editor:

Note that page-post ads such as the one below are only eligible to be shown in the News Feed of users who already Like the page running the ad or who have a friend that does. Ads in the sidebar can be shown to users who do not Like the advertiser’s page or have any other social connections to the brand. 

New this week on the Inside Network Job Board: Spooky Cool Labs, Social Dealer, SponsorPay and more

Posted: 23 May 2012 03:00 PM PDT

The Inside Network Job Board is dedicated to providing you with the best job opportunities across social and mobile application platforms. Here are this week's highlights from the Inside Network Job Board, including positions at: Center on Budget and Policy Priorities, Spooky Cool Labs, SponsorPay, Fiveonenine Games, Sociable Labs, Warner Bros, Socialdealer, King.com, PopCap Games, Wooga, Jellyvision Games, TinyCo, Mixr Inc. and SoJo Studios.

Listings on the Inside Network Job Board are distributed to readers of Inside Social Games, Inside Facebook and Inside Mobile Apps through regular posts and widgets on the sites. Your open positions are being seen by the leading developers, product managers, marketers, designers and executives in the Facebook Platform and social gaming industry today.

Investing in Facebook: Hussein Fazal of AdParlor

Posted: 23 May 2012 12:11 PM PDT

This week, Inside Facebook asks people who have built businesses on the Facebook platform why they believe in the company. These are the people that are truly invested in Facebook, whether or not they bought stock.

For Part 3 of our series we spoke to Hussein Fazal, co-founder and CEO of AdParlor, which provides Facebook ad services and software to optimize campaigns for clients including Groupon, Digitas and a number of social game companies.

Seeing the potential of Facebook

When Facebook opened its platform to third-party developers in 2007, Fazal was working as a software engineer at Bell Canada. In early 2008, he and a friend Kristaps Ronka decided to try building some Facebook applications in their spare time. Fazal didn't know what would come of it, but he thought it would be fun.

Fazal built a file-sharing app called My Documents, and Ronka made a treasure hunt app. Even though the apps only had a few hundred users, the two started to look for ways to make money off what they had built. When they couldn't find a good in-app ad network, they decided to build their own.

"As soon as we started working on the ad network, we realized there was real money to be made given the unfulfilled demand and the rapid growth of Facebook," Fazal says.

Developing a business idea

Fazal and Ronka initially struggled to get advertisers and publishers on board with AdParlor. If they signed a new advertiser, they wouldn't have enough publishers to give the advertiser the reach they wanted. If they signed more publishers, they didn't have enough ad inventory to fill the spaces.

But after "a lot of hustling," as Fazal says, the company became more established among game developers — including Zynga — and started bringing in six figures a month. When they saw the offer wall space begin to develop, they got into that business as well. The turning point for AdParlor came in early 2010 when an advertiser from China wanted to run a huge campaign to drive users to its app.

"They were looking to spend $1 million as fast as possible," Fazal says.

AdParlor didn't have enough banner or offer wall inventory to satisfy the advertiser, so Fazal says he turned to competing networks to serve the ad. It still wasn't enough volume for the client, so Fazal tried using Facebook's self-serve tool to run ads directly on the site, rather than within canvas apps. It worked.

"The advertiser called us and told us to shut down the banner network, shut down the offer wall," Fazal says. "The volume and quality of the Facebook ads was better than everything else we were doing."

Fazal ended up spending close to $1 million using the basic self-serve marketplace.

"We were like, 'Holy crap, we should start doing this for everyone!'" Fazal says.

AdParlor began using the Bulk Uploader tool and eventually got access to the Ads API, which was in limited private beta at the time. Within two months, AdParlor built their own platform using the API and it has since focused exclusively on ads within the right hand column of Facebook rather than in apps.

Confidence in Facebook

Fazal believes Facebook is fundamentally different than most websites and services because its power is not just on Facebook.com or its mobile properties, but in the network of information it has on its users.

"I feel every once in a while there's a big shift on the web," Fazal says, discussing how Google redefined the space by making it possible for people to find information they couldn't before. "I feel like Facebook is the same way. There really has been a shift in the Internet and what people do online."

He says the scale of Facebook is what really proves its value.

"Just go into a Starbucks and look at the laptops," Fazal says. "It's is everywhere."

Future of Facebook

Fazal sees a number of ways it could be integrated into products like social TV, car GPS systems, and recommendation services for music and movies. But as a developer in the advertising business, Fazal would really like to see Facebook launch a display ad network and build a better search engine.

"We'd love to have more inventory," Fazal says of serving ads off-Facebook. "And we'd love to have intent-based search ads."

Fazal acknowledges that these are big efforts, and Facebook search in particular could be a long ways off.

"Search is not an easy problem to solve," Fazal says. "But if everyone already goes to Facebook.com, that's a legitimate social competitor."

–

Read Part 1 with Clara Shih of Hearsay Social
Read Part 2 with John Corpus of Milyoni

Oracle buys Vitrue in a deal that could be worth $300M

Posted: 23 May 2012 10:48 AM PDT

Marketing hardware and software corporation Oracle today announced an agreement to acquire social media management company Vitrue. According to TechCrunch sources, Oracle will pay $300 million for the platform and its team, including CEO Reggie Bradford.

The acquisition could lead other large enterprise companies, like Salesforce and SAP, to begin pursuing social CRM companies more aggressively. Overall, the world of social marketing solutions is consolidating as many companies look to provide all-in-one solutions. Last year Adobe bought Efficient Frontier for $400 million not long after Efficient Frontier had bought Context Optional. Platforms like Buddy Media, Involver or Syncapse could be future targets for acquisition by companies looking to add more social media capabilities to their enterprise packages.

Vitrue's software platform has four main components: publishing, app development, social commerce and analytics. Vitrue does not offer its own Facebook ad management tools, though earlier this month the company announced a partnership program that includes ad services and software providers Involved Media, Marin Software, Nanigans, Optimal, SocialCode, Spruce Media and Unified. Vitrue also has a partnership with e-commerce software company ShopIgniter, which gives marketers the option to create a Facebook store, shareable coupons, referral and loyalty incentives, private and time-based sales, and group promotions, among other features.

Since launching in 2006, Vitrue has raised $33 million in funding and worked with brands such as McDonald's, American Express, Frito-Lay and Procter & Gamble. TechCrunch says the company is “nearly profitable” with revenues projected to be about $100 million. Bradford told us in 2010 that the company was profitable that year.

Vitrue recently launched a new branding campaign earlier this month designed to emphasize that brands should be using social media to build relationships with customers and not simply collecting Facebook Likes. This package, sent as part of a press campaign to Inside Network’s offices, displays the "Like Can Never Replace Love" initiative by including products from brands that Vitrue believes are loved:

Horoscopes, Spotify, birthdays, Viddy, Pinterest, games, more on this week’s top 20 growing Facebook apps by DAU

Posted: 23 May 2012 08:53 AM PDT

Horoscopes topped our list of Facebook-connected apps growing by daily active users this week. then there were a few birthday calendar apps, games and an assortment of Timeline apps, like Spotify, Pinterest, and other integrations.

The titles below grew between 230,000 and 2.6 million DAU, based on AppData, our data tracking service covering growth for apps on Facebook.

Top Gainers This Week

Name DAU Gain Gain,%
1.   Daily Horoscope 4,500,000 +2,600,000 + 137%
2.   Spotify 6,300,000 +1,300,000 + 26%
3.   MyCalendar – Birthdays 2,400,000 +1,200,000 + 60%
4.   60photos 1,500,000 +1,110,000 + 285%
5.   Viddy 1,500,000 +600,000 + 67%
6.   Bubble Blitz 550,000 +548,000 + 27,400%
7.   Bubble Safari 580,000 +530,000 + 1,060%
8.   Yahoo! Social Bar 4,100,000 +400,000 + 11%
9.   Scribd 1,200,000 +320,000 + 36%
10.   Buggle 1,000,000 +310,000 + 45%
11.   MiCalendario – Cumpleaños 830,000 +310,000 + 60%
12.   Bing 3,300,000 +300,000 + 10%
13.   Candy Crush Saga 2,300,000 +300,000 + 15%
14.   Pinterest 2,700,000 +300,000 + 13%
15.   Siz.net 970,000 +300,000 + 45%
16.   Texas HoldEm Poker 7,100,000 +300,000 + 4%
17.   Pyramid Solitaire Saga 750,000 +270,000 + 56%
18.   الأبراج اليومية 470,000 +270,000 + 135%
19.   MeuCalendário – Aniversários 880,000 +260,000 + 42%
20.   Zynga 900,000 +230,000 + 34%

Daily Horoscope topped the list; this type of app usually posts to the stream regularly. There was a trio of birthday calendar apps in English, Spanish and Portuguese. These apps usually ask the user to invite friends to use the app before allowing them to create a calendar.

Games were led by Bubble Blitz, and the Zynga.com platform also made the list.

Timeline apps like Spotify and Pinterest were popular. Photo rating app 60photos generates tons of feed and ticker stories as users rate their friends' photos. Mobile video app Viddy continued to grow at a good pace, as did other list regulars Yahoo! Social Bar and Scribd. The Bing integration showed moderate growth and Turkish website Siz.net also makes another appearance on our list.

All data in this post comes from our traffic tracking service, AppData. Stay tuned for our look at the top emerging apps on Friday.

torsdag den 24. maj 2012 at 07.21