Future Growth Drivers for Facebook:
1. Facebook Home
Facebook Inc (NASDAQ:FB) Home is the series of apps that effectively takes over the front screen of the mobile device. The Facebook Home experience effectively steals some of the thunder of Google Inc (NASDAQ:GOOG) in its own Android OS. The Home function will be the first point of contact for users for all sorts of Facebook-based communication on mobile. As a result, users of Home will be effectively spending even more time on Facebook Inc (NASDAQ:FB)’s platform than ever before which translates into much more enhanced levels of engagement, and more monetization opportunities through ad impressions.
The smartphone marketplace is expected to double up in size from current levels by 2016 and reach 1.4 billion units a year, according to IDC. Since a majority of smartphone sales are on the Android OS, Facebook Home can see very high-levels of customer adoption.
Home is a great move towards stimulating user engagement and a highly social and engaged audience is a great asset for Facebook Inc (NASDAQ:FB), as it will be able to earn more revenues from mobile ad placements.
2. Graph Search
Another untapped and potential revenue stream for Facebook Inc (NASDAQ:FB) is the Graph Search tool. Facebook’s management reiterated their stance towards graph search and stated that the project is still in data-collection mode and is for the long-haul. Once the Graph Search incorporates more data using the social components of Facebook’s social network the company can expect to see much larger and wider consumer adoption of this tool.
The external search is being powered by Microsoft Corporation (NASDAQ:MSFT) Bing, which makes the entire Graph Search function more user-friendly. Microsoft Corporation (NASDAQ:MSFT) has managed to gain some market share in the search engine marketplace in the U.S. However, Microsoft’s still holds second place and controls only 16.9% as of March-2013, which is still well below Google which controls more than 67%, according to comScore.
Facebook’s pairing up with Microsoft Corporation (NASDAQ:MSFT) for the Graph Search tool makes a lot of business sense as well. The market for paid search advertising is expected to grow to $48.8 billion in 2013, which is bigger than the display advertising market which is expected to grow to $39.8 billion, according to ZenithOptimedia. Facebook’s monetization opportunities stemming from the growth in online advertising is substantial.
3. Instagram
The very popular photo-sharing app, Instagram had roughly 22 million users when Facebook acquired it in 2012. And now Instagram has more than 100 million monthly visitors to its site. Instagram has become very popular in particular with younger age demographics, and has evolved into a social network on its own. And Facebook hasn’t even started monetizing yet.
