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What trending social IPOs mean for public relations


July 19, 2011

On May 19, LinkedIn became the first major social networking site to hold an IPO. (AP Wide World Photos)
On May 19, LinkedIn became the first major social networking site to hold an IPO. (AP Wide World Photos)

LinkedIn Corp. closed its first day of public trading on May 19 at $94.25 per share, tallying a net worth of nearly $9 billion.

This development triggered optimism for other social media companies anticipating Initial Public Offerings (IPOs), including Facebook — with a projected $100 billion valuation, according to CNBC — and eventually Twitter.  Regional deal-of-the-day site Groupon filed with the SEC for what could lead to an IPO valued at $20 billion.

These activities, however, are also drawing skepticism for similarities to the Internet boom and bust of 1995-2000, when tech companies launched pricey IPOs on lofty visions and little, if any, profits.

IPOs and acquisitions represent the next era of social media awareness. Communicators should welcome this new boost in enthusiasm.  We’ve implemented the tools for years — and while concern over another tech bubble is a drama all its own, there are also positives for PR practitioners to leverage during investment and consolidation activities.

Consider the following:

  • Big-ticket IPOs and acquisitions validate digital communication strategies. If your organization is engaged in networks like Facebook, Twitter and LinkedIn as a way to connect with audiences and develop customers, then you can tout these activities as signals of strong demand and longevity for social media tools. This is a good time to justify the use of your chosen platforms with internal stakeholders and propose additional investments within your organizations.

    Likewise, if leadership is still skeptical of social media, then you can now speak in terms executives appreciate: IPO and acquisition activity is proof that social technologies should be taken seriously.
     
  • Publicly traded and acquired social channels have more funding and more stakeholders. LinkedIn now has additional cash to further develop functionality. Imagine what is possible for cash-infused companies and the increased frequency at which they can introduce new features.

    As social sites go public or companies acquire them (such as Microsoft buying Skype for $8.5 billion in May), currently free features may become subscription-based as companies look for return on their investments by monetizing some services. Such changes could alter or limit the composition of certain digital communications campaigns.
     
  • Mainstay social channels are building on their ideal-use cases.  As technology markets mature and consolidate, remaining players position themselves based on core competencies. Brands and the communicators supporting them can better prioritize which tools to use and how much effort they should place on each.  Twitter, for example, is impressive at 75 million users, though it’s dwarfed by Facebook’s 600 million users. Twitter is ideal for peer discussions, generating buzz and business-to-business or nonprofit campaigns.  And Facebook is better positioned to create communities that consistently influence sales.

Recent behavior demonstrates that each platform is building on these roles. Twitter acquired TweetDeck for $40 million to help users manage high volumes of real-time conversations, while Facebook has introduced services that could supplant competing standalone tools: Facebook Places (location-based sharing; foursquare), Facebook Deals (opt-in sales deals; Groupon) and Facebook Email accounts (Gmail, Yahoo! Mail etc).

PR professionals can follow suit. It’s a great time to use this latest technology buzz as a catalyst to reinvest in and advance your digital communications programs. Even Wall Street says so.

Ryan Zuk, APR Ryan Zuk, APR, is a media and analyst relations professional, Phoenix PRSA Chapter member and Sage North America representative. Zuk can be reached @ryanzuk on Twitter. He also blogs at criticalmasspr.com.
Email: ryanzuk at gmail dot com



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