Hard facts: US$1 bn in profit, US$3.7 bn in turnover, 845 mn active users

Returns on the IPO are estimated to amount to US$5 bn. While an exact valuation of the Internet giant cannot be made on basis of speculations, rumors have it that the company is worth US$80-100 bn. The date for the IPO is also still a secret, but observers expect it to be between April and June. According to the company’s documentation, the turnover of the world’s largest social network was US$3.7 bn in 2011, most of it was generated through online advertising (US$3.154 bn). Compared to the 2010 figure – US$1.974 bn – this means a plus of 88%. In 2011, the company’s profit was US$1 bn (+65%). Facebook was not making profits until 2009. In that year profits hit US$229 mn. In 2010 the figure read US$606 mn. The figures for the number of users which Facebook delivered with it’s IPO application are stunning: There are 845 mn active users on a monthly average, 483 mn people access Facebook daily and 425 mn people go on Facebook via mobile. 2.7 bn ‘Likes’ and comments are posted every day.

User activity on the world’s largest social network

Source: Facebook IPO

Betting on the future

Undoubtedly, a lot of money is at stake for Facebook, shareholders and banks. US investment banks Morgan Stanley, Goldman Sachs, Bank of America, Merrill Lynch, Barclays Capital and JP Morgan are contracted to make Facebook go public for US$500 mn. There are heated debates around the question if US$ 1 bn in profits can really be translated into US$100 bn of net worth. Facebook’s IPO is often compared to that of Google in 2004: The IPO of the search engine giant generated US$ 1.7 bn in returns, which translated into the company’s valuation of US$23 bn. Google’s current market capitalization is at approx. US$190 bn, profits at US$9.6 bn.

Between euphoria and skepticism

Potential investors are advised to think twice since expert opinion is somewhere in between extreme euphoria and skepticism. German newspaper Süddeutsche Zeitung printed a very concise pro-contra analysis on p. 33 in today’s issue. As per the newspaper, the most important reason for the company’s high valuation is that Facebook is a milestone in the way millions of people communicate with each other every day, seemingly nobody can live without it anymore. When all the user data is used to generate profits, advertising revenues will sky-rocket. Facebook is an ideal platform for companies to generate business. There are no limits for growth phantasies. The arguments against the validity of such a high valuation are built exactly on these exaggerated visions for business growth and the fear of a second dot.com bubble. On top of this, Facebook does not benefit from growth in newly industrialized countries such as China. Problems regarding data privacy and patent issues will emerge.

Google will be measured on Facebook

The industry’s paper SAI Business Insider brought up an interesting comparison between Google and Facebook, showing both comapanies’ development during their first seven years in the Internet business. In this, Facebook’s turnover figures are significantly lower than those of Google. The article in SAI explains the different development with the fact that Google has found it’s own “business magic” in tailored advertising, which Facebook is still lacking. The question for potential stock investors is whether or not Facebook will find its own certain kind of magic to satisfy all the expectations for growth.

Can Facebook uphold its promises for growth with the largest IPO the Internet business has ever seen?

Source: SAI Business Insider

stanford engineering everywhere: High reach for free-of-charge online lectures held by renowned professors at Stanford University

Stanford is one of most renowned universities in the US. Already in 2008, the university offered lectures free-of-charge for everyone. Under the label stanford engineering everywhere, the University’s software engineering department for example offers various classes online.  More online classes can be found HERE. Starting Spring 2012, the Massachusetts Institute of Technology (M.I.T.) will make available free-of-charge classes via its interactive platform M.I.T.x. Students that successfully completed the class will also receive an official certificate from the MIT.

In 2012, Stanford University will offer more free-of-charge seminars held by renowned lecturers online

Many top players among the international universities make already use of digital media, in order to attract the brightest students. Most of them refer to iTunes U(niversity), the education section in Apple’s iTunes store. Since 2009, Munich’s LMU University is also connected to the Apple store, offering free downloads of digital contents and results for lectures, research and the University in general. Since it’s launch, the University’s portal has seen 12 million downloads – a clear indicator for high demand in digital education contents. Another example for digital education is tele-Task by the Hasso-Plattner-Institute for Software System Technology. Many other German universities are just in experimental stages.

Founding of Udacity.com: A start-up business to democratize higher education

Thrun said during his speech at the DLD, that this one seminar he offered online for free has had more influence on education than his entire previous career. The whole seminar can be seen on YouTube. Because of the overwhelming results, he founded the education platform udacity.com together with other colleagues, where the most up-to-date knowledge and research results are to be made available to students from all over the world for free. Equality in education for all under the slogan: ‘Democratizing Higher Education’. Among the contributors are some of the world’s most renowned lecturers and students from all over the world. One of the earliest topics was how to program a search engine or a ‘Robotic Car’.

University of the future: Equal education for all on udacity.com

Conclusion: It is about time that education institutions recognize the value of modern technology and employ it actively. Universities should consider the potentials of digital technologies and how they could enhance teaching. It is expected, that with the introduction of online lectures for free the rules of the game will change somewhat. But the initial investment is quite high. According to the NY Times, the MIT alone eats up millions of Dollar for its new digital platform. The challenge for professor Thrun is to make his platform valuable enough even without the brand ‘Stanford’ in order to survive on a highly dynamic market.

50% of the marketing budget goes to the digital media

The key point was to have the experiences traveller’s had in the real world reflected in the digital realm. Accordingly, about half of the marketing budget was allocated to the digital media. The hotel chain integrated social platforms like Facebook (approx. 220,000 fans via various accounts), Twitter (approx. 185,000 follower via various accounts) and Google+, as well as own platforms like blogs or mobile. According to the published figures, online purchases grew by 10% in 2011, Tablet sales even grew by 200%. It is estimated, that the growth figures will be even higher in 2012.

“As luxury consumers embrace digital media on a larger scale, luxury brands that do not commit to a holistic digital media strategy will not survive; it is no longer a nice-to-have but an essential pillar of branding and marketing”, says Susan Helstab, Executive VP Marketing, Four Seasons Hotels and Resorts

Website becomes marketing hub embedding customer reviews from social platforms

It is quite innovative how user-generated content was embedded on the hotel’s own website. Reviews coming from TripAdvisor, Twitter or Facebook are posted on the respective hotel’s page and linked directly. This bears certain risks, which many luxury brands do not dare to take. However, the posting of contributions seems to be not in real-time, yet. The below is a short video on the relaunch of the Four Seasons website, the marketing hub for all of the company’s digital activities.

New website of the Four Seasons directly embeds customer’s reviews on TripAdvisor, Facebook and Twitter

Individualized search results

Integrating Google+ into search algorithm has the potential to change the way we use the Internet

Companies advised to have social SEO on their agenda

The boundaries between web search and social web are getting increasingly blurry. The seamless integration of Google+ in Google’s websearch is a marketing factor that should not be underestimated, especially when comparing it to fan pages on Facebook. Google’s search engine market share in Germany reaches 85% and is at 65% in the US. The chance to be found on the web dramatically increases with a well-planned positioning on the Internet. Companies are well advised to encourage users to share their experiences with the brand online with others. However, some see the recent move by Google with skepticism, especially those who seek to defend data privacy and neutrality of the web. The digital industry’s magazine t3n already foresees a ‘Social Networks War’ within the tech industry: Twitter massively criticizes Google, having invoked a ‘Black Friday’ for the Internet, because up to now all breaking news were communicated via Twitter. Now it will be much harder to find those news. Facebook, too, will be not too happy about Google’s move, since the information on the world’s biggest social network is not included in Google’s search algorithm.

The Toggle Button: Optional personalized web search, soon to be introduced to Germany, too 

Conclusion: Currently, personalized web search is still an optional feature and can be deactivated by the user at any time. Future will tell in how far personalized web search adds value to Google’s search results. But the increasing importance of Google+ for Google’s web search makes it apparent for companies to act and put social SEO on their Internet agenda.

Germany: 43% of all mobile phones are smartphones

In 2011 the smartphone market in Germany saw rapid growth, that more and more ate away from the sales business with other mobile phones. 11.8 million smartphones were sold in Germany in 2011 according to the Federal Association for Information Technology, Telecommunications and New Media (BITKOM). This means a plus of 31% compared to the year before. 43% of all mobile phones sold in Germany are smartphones. Sales share has already reached two Thirds, since those phones are more expensive. Sales rose by 13% to reach 4.1 billion Euro. Sales figures for non-smartphones were down by 19% with 15.6 million units sold.

Source: BITKOM 2012 based on recent data by the European Information Technology Observatory (EITO)

Worldwide trend: Smartphones decisive factor for growth in consumer electronics in 2012

In 2012 the worldwide sales figure for consumer electronics will surpass the one billion Dollar threshold, reaching US$1,038 billion (up 5%). This is about US$45 billion more than in 2011. Smartphones are like a turbo booster for growth: According to the industry’s association in the US CEA, smartphones contribute to the sales growth for consumer electronics by 22%, followed by notebooks with 15%. “Today, consumers from every corner of the globe crave the latest tech innovations,” says Steve Koenig, Director Industry Analysis for CEA. “Rising consumer demand for mobile connected devices underpins the growth in global retail sales of CE we’re projecting this year.” Sales growth for other products like TVs or normal mobile phones has stagnated or shows a downward trend. Not surprisingly, this year’s CES in Las Vegas will feature a lot of new smartphones.

Scientists at Yale found out that people who make use of digital helpers are more likely to succeed in reaching their targets. New platforms offer radically new approaches: Users commit themselves to reaching their targets by putting their money or reputation at stake. Well, chances are that people will hold on at least until February.

stickK – Reach your goal or pay

www.stickK.com is a platform founded in 2007 allowing users to set their own targets by making a contract with nobody else than themselves. The platform offers two ways of ‘encouragement’ to hold individuals to account: Either financially by depositing money or socially by risking the person’s reputation. As for the former, users deposit a certain amount of money and determine a way to provide proof for them reaching their target. A doctor’s statement may be sufficient for proofing a loss in weight, regular visits at the gym may be signed off by a trainer etc. Individuals reaching their target will get their money back. In case the target is not reached, the deposited money will go to a charitable organization. For those who like to punish themselves, they may offer to transfer their money to an organization, club or person they detest, like the rival local football club or political adversaries. There are no limits to selecting beneficiaries. In case some want to go for the latter alternative and choose to hold themselves accountable socially, the necessary pressure is coerced by emails to family, friends or colleagues rather than through money.

www.stickK.com

K means the contract people conclude with themselves in order to reach targets set in resolutions

Researches at Yale seem to be right: 78% of subscribers succeeded in reaching their target with the help of digital gadgets

Gympact – Cash for Training

Individuals subscribing to Gympact essentially make a contract with an iPhone app. Money is used as motivating factor to reach one’s own targets. Who does not reach the target, will have to pay: Monthly fees of lazy subscribers will go directly to those who put in more efforts.

So what is new about this prototype, that still lacks a proper name? The vending machine will recognize the consumer’s sex and age via the face recognition device. Even before the consumer actually hits any of the buttons or throws in coins, a drink, make-up, perfume scent or other relevant advertisement can be displayed and recommended to the consumer. The face recognition device is also able to remember faces, thereby making it possible to recommend a previously purchased item upon the next interaction with the same customer. On the display a lot of detailed information on the desired product can be presented. This makes the prototype of these sort of vending machines predestined for selling goods with a higher price tag and/or that require much more explanation. “In this demo, we’re suggesting that vending machines could be used to purchase luxury items, such as cosmetics and wine. The machine also has a public safety mode in times of emergency, which shows information such as evacuation route … this machine could be used in lots of ways, depending on customers’ imagination. It has a great many possibilities, so we’d like to get ideas from everyone, rather than just using it as a regular vending machine” (via Diginfo TV). The target of employing these machines is to upgrade the ordinary purchasing process into a real event. For Germany this sounds more like technology in the year of 2033, rather than in 2012.

Next Generation Vending Machine: Communicating with the vending machine replaces communication with sales staff

Video provided by Diginfo TV

In Europe on the other hand, some vending machines embark on retro-chic, such as this vending machine from Austria selling fresh milk. The machine is mounted at the façade of and connected directly to the place of production – the cowshed.

Alternative vending machine made in Europe

Guaranteed fresh milk: Alpenhof’s fresh milk vending machine from Austria

Source: BITKOM, EITO 2011

In 2011 13.4 million PC were sold in Germany

Success of tablets leads to a change on the PC market

Looking at the number of tablet units, the market share of these devices has already reached 16% of the overall PC market within the past two years. Netbooks are suffering from this development. Their sales share went down steeply from 35% to 7% (900,000 units) in 2011. Notebooks, that hold the biggest market share of about 50%, also felt the impact of tablets. In order to compete with them, notebooks have already become increasingly lighter and smaller. These so-called Ultrabooks such as Acer’s S3 or other models in this class from companies like Asus or Sony will have a bright future, it is said. Currently, approx. 1 million units of the new Ultrabook generation are sold world-wide per year. According to market analysts of HIS iSuppli their share on the notebook market is bound to surpass 40% by 2015 (2% in 2011).

World-wide tablet market: Kindle Fire from zero to runner-up

HIS iSuppli sees Apple’s iPad as the leader on the tablet market, holding a market share of 65%. But with an estimated 3.9 million sold units until the end of this year, Amazon’s Kindle Fire skyrocketed in Q4 from zero to become the runner-up on the market. Samsung comes in Third with 1.4 million sold units, equivalent to a 5% market share.

Source: IHS iSuppli

Beck’s ‘Green Boxes’ projects to be presented in Berlin using AR

The centerpiece of this project are the so-called ‘Green Boxes’ that were exhibited worldwide in big cities such as New York, Miami, Mailand and London before. As part of a bigger marketing campaign this project aims to open up the young and urban target group to art, design and music using unusual ways. For the kick-off in Germany the artist group FriendsWithYou, which is also a sponsor of the project, developed an interesting augmented reality animation that is open to the public at the Brandenburg Gate until the beginning of January. Using the Beck’s Key App, smartphone users can hunt for other ‘Green Boxes’ throughout Berlin-Mitte and discover their virtual content. The AR-artspiece becomes visible via smartphone, tablet PC or iPad.

Beck’s Augmented Reality App in Berlin aims to reach the urban and young target group

Source: obs/Anheuser-Busch InBev

Heineken’s Social Christmas: ‘Social Christmas Tree’ and ‘Beerfriender’

Christmas is a good time for beer brands around the world to reach out to consumers via the social web. Heineken is no exception. Only a few days after announcing cooperation with Facebook, the Dutch beer brand aroused attention with social Christmas projects. In Singapore for example the traditional Christmas tree gets a makeover as Social Christmas Tree. Via a special feature on Facebook consumers can send season’s greetings digitally to their friends. The Tree will also be erected in Singapore for real, standing 11m high. Season’s greetings submitted by users will be displayed digitally.

It is well known that beer strengthens the sense of community among strangers. Heineken makes use of this common knowledge through another Facebook application. In a social campaign innovative beer kegs of the company are presented. The so-called ‘Beerfriender’ app now connects people, that would like to have such a beer keg as Christmas present for themselves, but instead the app makes it look like they gift it to somebody else. To get a grasp on this admittedly peculiar idea we recommend to watch the below video:

Austria: Bierfinder app by a small brewery

The world’s beer market is controlled to 50% by four of the largest brewery conglomerates. But an app launched by a relatively small brewery in Austria named Fohrenburg shows, that not only the giants are capable to make use of the most advanced digital technologies. The brewery was the first in Austria to develop a so-called ‘Bierfinder’ app, which makes it all the more easier for users to find the nearest bar or restaurant that serves the beer of their preference. Of course, this is also an outstanding app for the time after Christmas. Using their smartphone, beer lovers can see in which bars, pubs or supermarkets in their vicinity Fohrenburger beer is available. The app gives directions and shows the distance to the desired destination.

Bierfinder app by Austrian brewery Fohrenburg

Source: Fohrenburger Brauerei goes Augmented Reality

Screenshots: Zynga E-Cards and Cityville credits

A multi-billion dollar market in the US

According to a recent study, Techcrunch sees the first signs for a mature market in the US. The digital goods market there surpassed the US$2 billion threshold reaching US$2.2 billion in 2011, as market researchers of

Inside Network in their study ‘Inside Virtual Goods – The US Virtual Goods Market 2011 – 2012‘ found out. In 2012 the market volume is forecast to reach US$2.9 billion, in 2010 the market volume was just US$1.6 billion. Virtual goods on Facebook generate more than half of the market volume: US$835 million in 2010, US$1.2 billion in 2011 and an estimated US$1.6 billion in 2012. Based on Zynga’s IPO filing, Techcrunch estimates Zynga’s share on Facebook’s virtual goods market to reach 75%, which shows how much the success of Zynga is dependent on Facebook. Market researchers at in-Stat found that in 2010 sales figures went beyond the US$7 billion world-wide. By 2014 it is estimated that this figure will double to reach US$14 billion.

However, the much more interesting market is the one of mobile social games, Techcrunch finds. According to Inside Network the market volume of this market (only virtual goods, iTunes and the like excluded) reached US$350 million in 2011. The forecast for 2012 sees this number rising to reach US$500 million. One of the reasons for this growth might be that one single developer such as Zynga does not dominate mobile platforms.

Case Study: Cooperation between American Express’ Membership Rewards Program and Zynga

The cooperation agreement between American Express and Zynga shows how important the business with virtual goods has become for many brands. Since last year, customers of American Express can exchange their loyalty points with virtual incentives in order to further upgrade their farm, their hotel or other online possessions. Every month more than 200 million users play games developed by Zynga, which holds an enormous potential to generate reach for American Express.

American Express Membership Rewards Program: Apart from travel tours, coffee mugs or eat-ins at restaurants social games also feature virtual cows, ovens and game cards

A booming market for trading platforms for virtual goods

Facebook Credits enables many online retailers to offer their customers an extra incentive to buy goods. The virtual currency is integrated into the purchasing experience, e.g. when a customer decides for a certain product, reviews products or subscribes to a newsletter. Provider Ifeelgoods offers specialized services with virtual credits for the electronic trade and offers retailers to integrate these services on their websites. Gamers can trade their virtual goods via a Live Gamer Online Marketplace. The platform also supports advertisements for virtual goods, analyses, virtual gifts, display windows for items, catalogue management, payment systems, an own game currency and many more elements for publishers. The company entertains partnerships with EA, Sony and Real Networks. Their financing capital amounts to a respectable US$30 million.

Conclusion: Virtual goods sales have become a solid source for real income for the industry, particularly in the area of social games. According to Deloitte, an increase in the number of users leads to fewer turnover per capita though, while the value of advertising increases. This allows for a more balanced monetization across all users. In any case, there is still much untapped potential on this growing market for the advertising industry. The Internet still is one of the biggest playgrounds for users.