Facebook Inches Into Craigslist Territory With ‘Highlighted Posts’

Facebook is testing a product called “Highlighted Posts” that potentially puts the company into the online classified ads arena dominated by Craigslist by letting users amplify their status updates.
The feature — discovered by Stuff, a New Zealand blog (which is unaffiliated with the U.K. publication of the same name) — is being tested with a “small percentage of users” right now, a Facebook rep says. The fee for using Highlighted Posts, meanwhile, runs from zero to “a couple of bucks.”

When asked who would use the product, the rep gave the example of a small band plugging an upcoming gig or someone selling their car. The latter appears to be new ground for Facebook since the company hasn’t previously offered users the ability to amplify their status updates. If the program is successful, it could let Facebook enter the online classified market, a segment that the IAB pegged at $2.6 billion in 2011.
It’s unclear how the program — which is similar to new ad products aimed at corporate users — would work and if it would function along the lines of Reach Generator, a Facebook ad product that ensures that a high percentage of people in your network see your post.
The rep stressed that Highlighted Posts is one of many products the company is testing right now.
The introduction comes a week before Facebook’s expected IPO. Facebook filed an amended S-1 form on Wednesday highlighting the fact that its advertising growth hasn’t kept pace with its exploding user base.

11:59 by Robert dawne · 0

The Facebook IPO: Marketing, hypocrisy, and arrogance

There's something to be said for being a fossil when it's time to look at a phenomenon like Facebook's pending stock offering. The medium is new, the numbers are high, the buzz is huge, but it's the same old story I've seen a million times in four decades of business writing: A hot company is graciously offering the investing public a piece of its action. At a hot high price, of course.
Look, I know I'm a print dinosaur. I was wrong, early and often, on Google's (GOOG) stock price when it first went public, for which I ultimately apologized. My one and only Internet innovation came about 20 years ago, when I was among the first business columnists to publish an e-mail address. I don't use social media because I value my privacy and fear committing some online indiscretion that would follow me forever.
That said, I'd like to share three things that leaped out at me from Facebook's financial filing. They involve marketing, hypocrisy, and arrogance -- in other words, standard Wall Street fare.
Marketing
If Facebook's offering ends up being the advertised $5 billion, and the company's stock market valuation is in the expected $75 billion to $100 billion range, it means that only 5% to 7% of the company's shares will be available to public investors.
While there are all sorts of rationalizations for having such a small public offering relative to a company's size, the real reason, as any Street insider will tell you, is to create an initial shortage of stock so that the share price runs up when public trading starts.
It's not enough for Mark Zuckerberg & Co. to have created an amazing, incredibly valuable company over an incredibly short period. They feel the need to use this tacky market trick to drive up Facebook's value even more.
Why do it? Facebook gets bragging rights -- and so do the venture capital types who have put money into the company. A higher Facebook share price begets a higher reported return for investment managers to show potential clients, making it easier to market the next fund. In VC-land, there is always a next fund.
Hypocrisy
A key selling point of social media is that it's a democratizing force -- everyone's on an equal footing, yadda, yadda, yadda. But Facebook's stock structure, like Google's, is far from democratic.
There's one class of voting stock for the public peasants, and a higher voting class that ensures control for the elite insiders. Everyone's equal in theory. Just not in practice.
Arrogance
Ever since Google included a "don't be evil" screed in its initial public filings, a founder's letter has become de rigueur for a hot Internet offering. Zuckerberg's is a classic. My (admittedly skeptical) takeaway: I'm not just a really rich guy, I'm a really good guy because I'm in this to make the world "friendlier," not to make money.
Yeah, right. And Wall Street exists to help small retail investors. And the check is in the mail.
This article is from the February 27, 2012 issue of Fortune.

21:30 by Robert dawne · 0