Facebook's IPO suggests success, experts have differing opinion

Facebook's IPO suggests success, experts have differing opinion - With Facebook's initial public offering dominating tech news, companies, marketers and financial institutions are making predictions about the social network's future, especially whether it will be able to monetize user interactions and prove to be an advertising powerhouse.

In a recent article for Inc. magazine, Michael Mothner forecasts that Facebook may face some choppy waters in the near future, making it essential for small business marketing experts to pay close attention to the social network's decisions in the future.

Facebook recently priced its shares at $42 per unit, giving its company a valuation of approximately $116.6 billion, according to CNN. However, Mothner warns that Facebook's valuation is already bloated - Google's revenue was 10 times as large as Facebook's last year, yet its market cap is only double Facebook's.

Mothner suggests Facebook will need big revenue growth to validate its valuation, and while Facebook shares may grow quickly grow in the next few weeks, he believes it's unlikely to last.

One channel through which Facebook has indicated its hopes to grow is mobile. When executives met with the IPO's chief underwriters, they pointed to mobile devices as one digital medium through which they had yet to fully engage with users.

However, Mothner writes that entering the mobile sphere will not be enough for Facebook, as mobile ads will provide a new source of revenue but are by no means a "silver bullet."

"The reason is alarmingly simple: There simply is not enough screen real estate on mobile devices like iPhones to add much in the way of ads without severely and adversely affecting the Facebook experience," he writes. "That is the reason we do not yet see ads on mobile devices today."

There is one move that could make Facebook a more worthwhile advertising avenue for small businesses, though. Mothner suggests that if Facebook built an ad service like Google's, which shows ads across a range of sites that's are related to the content on those sites, it would be even more successful because of its huge wealth of customer data.

Yet, Facebook has failed to do this. So is Facebook still a good place to advertise? GM's recent pull-out suggests otherwise, but experts suggest that companies are successful on the network - they just need to learn to work with the network rather than against it.