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From introducing Timeline to introducing mobile revenue, Facebook was on a roll this year
No one can say that the team over at Facebook was slouching this year. From new partnerships and acquisitions to complete layout overhauls and revenue streams, the social media giant used this year to perfectly poise itself for a mammoth IPO next spring.
Here is a look at 10 of the biggest moves that Facebook has made in the last year before its anticipated $10 billion IPO.
1 - Facebook patents social-based searches
In March, a patent request for social-based searches was finally approved, opening up a whole new realm of possibilities for the social networking company.
The patent explains the tool as: Search results, including sponsored links and algorithmic search results, are generated in response to a query, and are marked based on frequency of clicks on the search results by members of social network who are within a predetermined degree of separation from the member who submitted the query. The markers are visual tags and comprise either a text string or an image.
The second-half of that description starts to clarify that links in the search results are determined by how many social network users have interacted with those links. That means that these results are specifically influenced by people closer in relationship to the user doing the searching.
This is a strong tool to have a patent on in the social media world and helps users get the most relevant returns when they are looking for a group or person that they wish to connect with or follow.
Last fall, Facebook was awarded the trademark for the word “face” when used in connection with an online communication or social service and continues to apply for other intellectual property patents that allow the company to keep its edge in the marketplace.
2- Facebook adds subscription option
In September, Facebook announced the launch of a 'Subscribe' button. The new tool gives users more control over what stories they see in their news feed and allows journalists, TV personalities and celebrities a way to keep the public in the loop. Subscriptions allow users to decide the level that they want updates from people they subscribe to (“All updates,” “Most updates,” or “Important updates only”).
This change was one move that helped Facebook create a more Twitter news element.
“Until now, it hasn't been easy to choose exactly what you see in your News Feed,” wrote Facebook engineer Zach Rait upon the announcement. “Maybe you don't want to see every time your brother plays a game on Facebook, for example. Or maybe you'd like to see more stories from your best friends, and fewer from your co-workers.
“You also couldn't hear directly from people you're interested in but don't know personally—like journalists, artists and political figures.”
This announcement came shortly after Google+ went public with its own signature 'Circles' feature that allows people to choose what information is shared with particular friends or followers.
3- The growing Facebook team and tools
Facebook, which said it would be acquisitive in 2011, has made some great strides this year in grabbing up great tools and talent. Many of the acquisitions were heavy on the design aspect while some others, such as the purchase of location-focused Gowalla, were more for the check-in expertise that is growing on all social-networking platforms.
Beluga (acquired March 2011) was a free and private group mobile messaging service that has since been translated into Facebook’s second official mobile app, Facebook Messenger.
Sofa (acquired June 2011) was an Amsterdam-based software and design team whose very product pages seemed to be promoting eye candy than actual software. For an example of this, take a look at Kaleidoscope and Versions.
Push Pop Press (acquired August 2011) was a digital book creator whose sole product transformed Al Gore’s 2009 novel “Our Choice” into a stunning e-book on the iPad, complete with rich media like photos, videos, interactive maps, infographics and more.
Gowalla (acquired in December) was an Austin-based tech company known as a rival to the better-known Foursquare. Gowalla recently created a stronger focus on travel-guides and attracted more funding and users after taking the new angle. Perhaps this would have deeper integration so that when Facebook users check-in, they can be notified of friends in the area or great coffee spots that friends have been to (a popular new feature offered by Foursquare's radar.) Since the f8 conference earlier this fall, Facebook has been a-buzz with more geo-tagging and other location interaction. From QR codes, to badges, check-ins and offering RFID tags to locate where in a conference or gathering people are (for even more specific followers.)
Location-based information has been on the rise for the last three years as Twitter, Facebook, Fwix and other services have encouraged people and publishers to geo-tag their content so that people can aggregate and organize information based on where in the world they are -- or want to go. The RFID tags that were available that the f8 conference were a big hit, and let people in on the service that Facebook uses at its headquarters. For people to use it, they took the tag connected to their conference badges and register it online -- then every time they swiped the tag, they were digitally check-in and could opt-in to be tagged in photos. As location services become a deeper integration into most online and shared content,
Facebook and other companies are using this wave of change to visualize and share information with people.
Facebook's acquisitive year, was a continuation of a healthy appetite in 2010.
Divvyshot (acquired April 2010) was a photo service that enabled users to collaborate with others in grouping together their images into collections called “events.” More than anything, however, Divvyshot was simply stunning, and we can safely bet that the former team helped develop the new photo viewer on Facebook.
Hot Potato (acquired August 2010) was a social media sign-in service, letting users broadcast what they’re doing at that moment (like what they’re watching on TV or what location they’re at).
4- Facebook messenger
Over the summer, Facebook launched a brand new mobile app, for both Android and iPhone, called Facebook Messenger. This is basically a mobile version of your inbox on Facebook and creates a real-time stream to message people that are on the Web or their mobile (and if they are not logged in, then they will see the notification of a new message when they do log in.) At its core, Facebook Messenger is a tweaked version of Beluga, the group messaging app that Facebook acquired in March. This new feature looks to be a threat to SMS messaging and many consumers have responded that they prefer this app to the standard Facebook app (even though the app only allows messaging.)
This move is one that is currently not monetized, but if the company builds up the loyalty to the app, there could be great revenue options tied to it in the near future.
5- Facebook is flush with cash
Facebook's financial reports came out through an anonymous source this winter and it reported that between January and September of 2011, Facebook pulled in $2.5 billion of revenue with $714 million of net income. Additional speculation stated that Facebook may even pass the $1 billion mark in year-end profits.
This report would put Facebook in the ballpark of companies like Yahoo and eBay and instill more investor confidence as the company gets ready for its IPO.
With estimates that Facebook will go for a $10 billion in the offering, putting it at a $100 billion valuation, these numbers poise the company to fair better in the public market than Groupon or Pandora did this year.
6- Heading to the Arctic for more server space
In October, Facebook announced that it would create a mammoth server farm in the frigid climate of Lulea, Sweden.
With 800+ million profiles and troves of data, Facebook needs a lot of power and a lot of servers, and the Telegraph UK said that Facebook is officially announcing the new Arctic presence some time on Thursday.
This would be the first server farm that the Bay Area company has commissioned and is expected to be a multi-million dollar "mini town" in the frigid climate that averages near 35 degrees fahrenheit. The temperatures and isolation are a draw for technology companies that want space and climate conducive for housing servers that could span several football fields of terrain and equate to the energy consumed by tens of thousands of people.
“Facebook has more users outside the U.S. than inside,” a Facebook Director of Site Operations Tom Furlong told The Associated Press. “It was time for us to expand in Europe.”
Most of the Facebook servers are housed in California, Virginia and North Carolina so this first moved to house servers outside the US is momentous and was not embarked upon lightly. The Lulea data center is scheduled for completion by 2014 and will likely need 120 MW of energy.
Lulea is approximately 60 miles south of the Arctic Circle and has serious infrastructure for hydroelectric power that can help Facebook go greener and run its system on renewable energy.
Facebook said in a statement the three server buildings will have an area of 300,000 square-feet each and that the construction takes place in three phases, starting now.
7- Possible gambling revenue in the future
Facebook revolutionized social gaming by creating a credit system for some of the most popular online games like CityVille, Zynga Poker and FarmVille. But now it looks like the social network giant could be doubling down on the real gambling market.
An exclusive published a few weeks ago from the UK's eGaming Review revealed that Facebook is in talks with "several operators to open its platform to real-money gambling in the UK."
The timeline for such an endeavor is unknown as of yet, but the company has been in talks about ways to translate the social gaming and credit system into a real money maker.
The speculation comes after larger talks of a looming IPO for the largest social network ever. The IPO is expected in the spring of 2012 and looks to set the Palo Alto-company up to raise $10 billion, bringing the Facebook value somewhere in the $100 billion realm.
The Facebook credit system currently cuts itself a 30% slice of the virtual token revenue from social gaming. But a real money version would leave many questioning if that would impact the credit system and how people would "cash out" winning.
The talks appear to only be a UK project since many states in the US bar gambling and the logistics of offering such a service on a state-by-state-basis seems highly unlikely.
The current frontrunner on the Facebook gaming segment is the IPO-hungry Zynga, with 30+ million monthly users -- roughly 6% of the social network population. Facebook might be in search of alternative revenue models as Zynga launches, its once Facebook-exclusive, games on its own website and other platforms like the quickly-growing Google+ (with 40+ million in the population and counting.)
In July, Facebook amended its UK gambling app policy to allow gambling companies to launch non-money applications as long as it was made clear that it was not traditional cash gambling. And current Facebook guidelines specify that “ads that promote or facilitate online gambling, games of skill or lotteries, including online casino, sports books, bingo, or poker, are only allowed in specific countries with prior authorization from Facebook”.
8- It is the time of Timeline
Another item announced at the f8 in September was the highly anticipated Timeline feature which finally went live for everyone this month. Facebook was mum about the layout change for nearly four months after the conference and then started the rollout this month -- the complete platform-wide change finalizes this week.
This ambitious layout makeover completely redesigns how people interact with profiles. Everyone should have the function as of now and you have seven days review the feature before your friends can see your new shiny set-up. Already more than 1 million people are using the feature, according to Facebook.
With a design reminiscent of a scrapbook, Timeline the biggest redesign Facebook has ever undertaken. Since the change is so drastic, Facebook is gave people a one-week review period to delete or hide anything on the Timeline before anyone else gets a peek.
This feature has spurred a lot of buzz about what users do and don't like about the change -- which was expected.
Some people criticize that this change is messy or that it has too big of a focus on photos that people post, but others are excited about the ability to retroactively fill in life events and memories to digitally store forever.
In the coming year there will be a lot more talk about how Timeline evolve along with the Facebook model.
9- New advertising models
From sponsored stories to mobile ads, Facebook is using this time to show that it can continue to innovate its revenue as it approaches IPO.
This month Facebook announced that it will soon start displaying sponsored stories in the news feeds of users, rather than the sidebars and standard advertising columns.
Facebook tested whether advertisements could be incorporated in the news feed in 2006 and in 2008. This time, however, much like is being seen on Twitter, the “sponsored stories” will only appear if people you know (or you) interact with a product -- and users will see no more than one sponsored story in the feed per day.
According to Facebook, users won’t be able to opt out of seeing sponsored stories in the news feed will be given the option of clicking on an 'x' to close the story once a user sees it.
Essentially what users might see would be an entry at the top of their feed that a friend had checked into Starbucks recently or that their favorite TV show is running a promotion.
A recent 10-day, two billion impression test conducted for Facebook Ads API service provider TBG Digital revealed that the new sponsored stories ad units received a 46% higher click through rate, a 20% lower cost per click, and an 18% lower cost per fan than Facebook’s standard ad units.
Similar sponsored opportunities will also appear on the yet-to-be revenue-ized mobile application.
10- Mobile social gaming growth
Facebook announced this year that it is testing more games and gaming stories in its mobile news feed to help developers use the recently launched HTML5 mobile platform.
In previous years, Facebook and gaming companies like Zynga, were very focused on the friend notification system (which received a great deal of push-back and 'spam' labels) in order to easily raise game awareness outside the traditional advertising venues.
According to the Facebook, this mobile gaming story system will not be as aggressive as the old notifications and will look more like a roundup that might say “Maggie Green and 5 other people recently played CityVille.”
Once a user sees this general update, they can then scroll to see which friends are playing and links to the games. Thankfully, this more general system allows people to interact or overlook the updates more easily than the old news feed notifications.
Facebook has also added new categories for the games to be saved and searched under, including: Casino, Family, Sports, Strategy and Word. Also the term "Role Playing" is now called 'Adventure' and "Virtual World" is now "Simulation."
The Facebook update also stated that earlier this year, the company hosted its first Social Games Hack at the Facebook headquarters and it resulted in some great game creation tutorials and monetization strategies that new developers can use in their creation process.
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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users. Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel. Zynga is headquartered at the Chip Factory in San Francisco. For more information, please visit www.zynga.com.