Facebook Set To Launch IPO
Facebook announced an Initial Public Offering (IPO) today to enter the stock market seeking approximately $5 billion in revenue from selling it’s shares. Facebook acquired $3.71 billion last year, up 47% from 2010. The 88 percent Year Over Year growth was mostly due to a 69 percent increase in display ad revenue. Ads delivered on the platform surged 42%, with the price of ads delivered up 18%.
“In the fourth quarter of 2011, we increased the reserve price (i.e., the minimum price threshold) in our advertising auction system in order to reduce the frequency with which low quality ads are displayed to users. This change caused a reduction in the overall number of ads shown and increased the average price per ad as a result of factors including the removal of ads with bids that were below the reserve price and some advertisers raising their bids in response to this change.“
Not only does Facebook cash in on advertising, they are making money on every city you build or farm you rake. Revenues from online gaming giant Zynga accounted for 12% of 2011 revenues. No other company has ever accounted for more than 10%. Games in Zynga use Facebook Credits instead of dollars which encourages younger generations to think they’re paying in Monopoly money. Facebook makes 30% from credits sales.
