Financiers watch for social media initial public offerings, and marketers just use the platforms. There doesn’t seem to be much real (or need) for overlap, right? If you take a closer look at the IPO market, you’ll see the contrary to be true: marketers should be watching social media IPO activity very carefully. How these companies behave while planning for their shot at ringing the opening bell directly affects how you do your job.
There are a number of ways you can use social media IPO news to become a better marketer. Here are a few ideas:
1. Valuation as indicator: there’s a reason why investors are snapping up shares of Facebook on private company exchanges like SecondMarket. Demand provides at least some hint as to longevity. As the implied valuations increase, you get a sense of how important these companies are. If a finance guy sees a reason to spend a lot of money on a company, you should spend some time thinking about how you could use its platform.
2. New features: on the road to an IPO, revenues and profits matter a lot. Companies aiming for successful IPOs will push to grow both metrics aggressively. Often, that means new features designed to increase users, interaction or even direct revenue. Expect new opportunities – with these new features – too reach your target market. Be ready to explore and exploit them quickly. If you need examples, you’ll find plenty on LinkedIn (recently public), Facebook and especially Twitter.
3. Disclosure details: what a company tells investors can be useful to marketers. Read the S-1s that companies file when they announce their IPO plans. The risk factors show information about competitors and future plans. Strategic objectives give you a sense of what’s to come. And don’t forget to take a look at the financials: do you want to bet your company’s future on a platform that won’t last?
4. Merger-mania: whether it’s acquiring or acqhiring, some social media companies are growing this way. Such moves help them gain market share and new products/features, and they can use M&A to eliminate competition. All of this changes the tools available to marketers.
5. Changes in everything: going public (or even planning to do so) changes a company. Internal controls and discipline become more important. New product launches tend to be a bit less haphazard. Business interactions become more formal. Marketers may need to adjust to changing relationships – both in terms of how the relationships are conducted and with whom.
So, you can see how much food for thought there is here. IPOs aren’t just for the financial folks – you need to be ready for them too. Over the next few years, some social media platforms will disappear. Others will look nothing like their current iterations. Financial markets are trying to tell us a lot about what’s around the corner; we just need to be ready to listen.
How do you stand on this? Are you going to start paying attention to the tech IPO market now? Just curious. Leave a comment and let me know!