4 Ways the IPO Will Change Facebook Forever

Get ready for the Facebook feeding frenzy. On Thursday afternoon, the company priced its initial public offering at $38 a share, giving it a market value of $104 billion. The stock begins trading Friday on the Nasdaq.

The result for Mark Zuckerberg, Facebook employees, and early investors is clear. The IPO will make many billionaires and countless others millionaires.

But what about the rest of us? How will Facebook as a publicly traded company affect everyday users who just want to know what’s going on with their friends and family? While any answer to these questions involves speculation, it’s a good bet that Facebook’s IPO will change Facebook.

Here are four ways users may experience this change firsthand:

1. More ads. Facebook makes most of its revenue through advertisements. As a public company, management will experience pressure from the press and investors to meet quarterly numbers. More than that, its hefty IPO valuation will demand phenomenal growth of both revenue and net income. While Facebook would do well to diversify its income streams, it’s a sure bet that part of its strategy will involve enhanced ad revenues.

Google offers a good history lesson. Anyone who has used the search giant is probably aware that Google inserts paid advertisements above the search results and to the right of the search results. What you may not have noticed is that the number of those ads has steadily increased over the years as Google looks for more growth. In fact, in the last year or so, Google has even started inserting ads promoting its own content in highly sought after verticals such as credit cards, banking, and mortgages.

Exactly how this ad growth may affect Facebook users is unclear. But we are likely to see more commercialization of our Facebook pages.

2. New mobile. Mobile users of Facebook account for nearly 50 percent of its user base. According to its S-1 filing with the SEC, Facebook had 488 mobile users in March. With the growth of the smartphone and tablet markets, more Internet users are going mobile than ever before. So why is that a problem for Facebook?

The problem comes in the form of revenue: Facebook doesn’t make any from mobile. Some have predicted that Facebook will introduce ads into its mobile platform. That’s certainly a possibility. What is certain is that Facebook will be looking to monetize its mobile platform in one way or another. If done right, it should enhance the user experience. If done wrong, it could mean just more annoying ads.

3. Less privacy. A lot has been written about Facebook’s IPO and user privacy. What we haven’t seen is much in the way of specifics. Exactly how or why would going public have any effect on privacy?

The answer is simple: ad revenue. Google gets the benefit of our searches to present us with relevant ads. If you are looking for “Nike Zoom Ja Fly” running shoes, Google can present paid ads for exactly that. But Google is a search engine; Facebook is not. Google has the benefit of knowing in real-time exactly what we are looking for.

Perhaps that’s why Google generates about seven times more revenue per user than does Facebook. Google generates about $9.52 per monthly user, while Facebook generates just $1.32. And that’s a big problem for Facebook.

One solution would be to improve its ad platform. To do that, it may turn to more user data. If done correctly, the result could be positive for users. Relevant ads that don’t overwhelm the content can be helpful. Taken too far, however, and the results could be disastrous.

4. Facebook-generated content. If the above potential changes at Facebook are speculation, this one can safely be categorized as wild speculation. But it seems that Facebook-generated content, in contrast to the user-generated content that dominates now, has tremendous potential if executed correctly.

Currently, Facebook has a wealth of data that is largely untapped. Putting aside privacy concerns for a moment, one wonders if Facebook could enter markets now dominated by the likes of Groupon, Craigslist, and Yelp in ways no other company could. Facebook would need to leverage the information already tucked away in more than 900 million Facebook pages. But if it could do so in a way that made our lives better without compromising privacy, the potential is virtually unlimited.

Imagine Facebook-created content about local events powered in part by user-generated content stripped of any data that would give rise to privacy concerns. In some cases, Facebook could choose to generate its own content; in other instances, it may choose to partner with existing technologies and brands. But either way, the income potential makes me wonder if this isn’t in Facebook’s future. Time will tell.

Until then, be a friend and like the Dough Roller Facebook page. DR is the founder of the popular personal finance blog, the Dough Roller, and author of 99 Painless Ways to Save Money.

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