Profile: Sir Charlie Mayfield

John Lewis Partnership Chairman

Facebook more valuable than McDonald’s

Facebook will begin trading on the New York Stock Exchange today (18 May) pricing its shares at $38 (£24) each, the biggest flotation ever achieved by an internet company and third largest US IPO ever.

Facebook

The world’s largest social network has raised more than $16bn (£10bn) from investors, only just behind the $18.1bn raised by General Motors in 2010 and Visa’s $17.9bn IPO in 2008.

Facebook’s share price values the firm at $104bn (£66bn), more than many other global blue chip companies such as McDonald’s, Kraft and Disney.

In the first quarter of 2012 Facebook reported $1.06bn (£657m) in revenue, down 6.5% quarter-on-quarter, although still up 45% year-on-year. Profit dropped 12% year-on-year to $205m (£127m).

Advertising revenue accounts for 82% of Facebook’s total income, but advertisers have recently cast doubt on the social network’s ability to act as a revenue driver for them.

US car giant General Motors said it was pulling all paid for advertising from the network earlier this week.

UK marketers from various sectors have told Marketing Week that Facebook must provide them with more proof their campaigns on the network provide a return on investment if it is to secure their advertising budgets in the future.

Readers' comments (2)

  • I think that Facebook is just a platform for brands to engage with its consumers.

    I find that it is not the responsibility of Facebook to guarantee a ROI for a brand, it is more a platform for a brand to communicate its campaigns which should generate its ROI. No matter how good the campaign if you cant communicate it properly then there is no point in running the campaign altogether.

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  • I'm a media buyer (a Facebook client) and FB should note that in the eyes of their clients, they are just one of the channels.

    They will not just be competing against other Social networks but they are competing with TV, Print, Radio, Online Video, etc.

    And buyers will always be on the look out for the mix that will drive the biggest bang for the buck. If you don't bring in the dollars, we're not giving you any.

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