America’s highest-net-worth individuals have once again been ranked by bank account in the latest Forbes 400 list, and along with the paucity of exceptionally wealthy women, one of the most startling revelations is the speed at which last year’s social media chiefs have slid down the totem pole.
Together, social media’s young masters lost US$ 11 billion in a single year, raising doubts about whether wealth generated in the hype-splashed sector has staying power.
The fortune of Facebook’s Mark Zuckerberg slipped the furthest. In just over three months after the social network’s widely publicized IPO “pop” in May, the company’s market value has dropped by over $50 billion dollars. Its 28-year-old founder’s net worth has dwindled by $8.1 billion to hit $9.4 billion, and his Forbes placement has fallen from 14th to 36th. In his new status, Zuckerberg is tied with another man who had a rough summer in the headlines: 81-year old Rupert Murdoch.
As Forbes points out, however, Zuckerburg is still $2.5 billion wealthier than he was only two years ago (in 2010 he was ranked 35th with an estimated net worth of $6.9 billion), and is “handily entrenched in the ranks” of the famous rich list. The same cannot be said for three social media moguls who dropped off the monopoly board:
- The devaluation of Facebook’s shares was enough to cause venture capitalist Jim Breyer to fall $50 million short of the $1.1 billion cut-off separating the very rich from the merely rich.
- The stock of group discount network Groupon has dropped by 80 percent during the past year, leaving Chairman Eric Lefkofsky with $1.03 billion.
- Social gaming site Zynga’s share prices have plummeted by more than 66 percent since last December’s IPO, trimming $1.24 billion from the wealth of its CEO Mark Pincus, whose fortune is now estimated at $760 million.
With so much air having been let out of the social media balloon, the question of monetization is surfacing with greater urgency. As users get more social on their smartphones (nearly half of Facebook’s nearly 1 billion users were accessing the site on a mobile device by May 2012), one realm in which networks have been seeking to carve out revenue is mobile advertising.
Facebook, which has been lagging in the mobile ad revenue department (it is predicted to hold a mere 2.8 percent of the U.S. market this year according to eMarketer), announced on September 18 a pilot project for a mobile ad network.
Through the service now being tested, advertisers can pay to target users within third-party mobile apps with banner or full-screen ads that are customised based on Facebook data such as "likes" and demographic profiles, thus putting more relevant ads in front of Facebook users wherever they go. This will allow Facebook to capitalize on our data (which the company insists will remain anonymous, with “no personally identifiable information… ever shared with third parties”) while damaging user experience as little as possible.
According to the Financial Times, analysts predict that Facebook will launch a more expansive ad network, encompassing web and mobile devices, within the next year.
Worries about whether Facebook could make money from mobile usage were allegedly a factor in its disappointing IPO, and the social network saw its stock price lift to a seven-week high of $23.29 on Wednesday as news of the network broke.
"We view the reported launch of a mobile ad network as another signal that Facebook is moving aggressively to improve user monetization," commented Colin Sebastian, an analyst at Robert W Baird, in a client note quoted by Bloomberg (via TechCrunch). "Facebook has the potential to become a more relevant ad network than Yahoo and AOL, and to compete more directly with Google."
Google is presently the predicted leader in mobile ad revenue, with an expected 2012 market share of 55 percent, according to a report by eMarketer, released earlier this month. The report also foresaw that by 2014, the social network would reach second place with a market share of 9.5 percent, overtaking the likes of Pandora (2012’s predicted second place holder with an 8.7 percent market share) and Twitter (in third with a 5 percent predicted share).
"We are a mobile-first company," Facebook said in a statement earlier this month. "While it's still early, the results that marketers are seeing on our mobile platform are positive."
Don’t start hearing the phantom ring of your Facebook phone, though; in his first interview since the IPO, Zuckerberg denied rumours that the company is planning to launch a hardware system, telling TechCrunch that while mobile is “huge” for the firm, “a Facebook phone doesn’t make sense.”
Image courtesy of mtsofan via Flickr Creative Commons