Cashing Out: Week of December 11th – 17th 2011 in Online Marketing News
Zynga’s IPO less than stellar
Social gaming company Zynga made its stock market debut December 16, and its disappointing performance has led some, like Mashable, to question whether the the IPO signals â€œthe end of the social media bubble.â€
Having raised $1 billion, and setting its shares at $10 a pop prior to its first day of trading, Zynga’s shares rose to $11.50 during the day, only to fall to $9.50 by market’s close, and $9.43 in after-hours trading, down more than 5 percent since opening.
It’s a reception that TechFlash is calling “lukewarm,” chalking it up to the company’s dependency on Facebook, “where 94 percent of its revenue is generated from social games like Farmville.”
Still, says Mashable, “Zyngaâ€™s debut on Nasdaq could have been worse. The stock opened at $11, which is 10% above the asking price. It didnâ€™t hold on to that gain, but it didnâ€™t fall very far, either.”
And, according to analysts cited by Mashable, Zynga’s uninspiring debut might have more to do with investors’ feelings about social media IPOs in general than it has to do with the company in particular.
â€œItâ€™s a very telltale sign of how people feel about social media IPOs in general,â€ Jeffrey Sica, owner of Sica Wealth Management told Mashable, adding that investors are uncomfortable with the industry “Thereâ€™s a lot of fear in the market right now.â€
However, the article points out that Facebook, which is planning its own IPO in the coming year, should not expect the same chilly reception as Zynga, Groupon, or others have received. While the average price of social media stocks to go public since 2010 has fallen by 32 percent since their debut,Â Kevin Pleines, an analyst at Birinyi Associates told Mashable that investor skepticism shouldn’t be a problem:
“Theyâ€™re a different animal because of their sheer size and scope.”
Delayed, SOPA likely to be approved
We won’t have to wait until 2012 to hear more from the debate on the largely unpopular bipartisan-backed Stop Online Piracy Act (SOPA).
The bill, which seeks to “blacklist” websites that infringe on copyrights has been a point of contention between companies involved in traditional entertainment, like Disney and the Motion Picture Association of America, and web giants, like Google, Facebook and Twitter.
It appears that, rather than resuming the debate on SOPA this January, when the House Judiciary Committee returns from holidays, the house has decided instead to continue talks December 21. Many, like TechCrunch are taking this as an omen of what’s to come:
“Itâ€™s telling how badly the billâ€™s supporters want this thing to go through that theyâ€™re willing to come in right in the middle of the holidays to do work that could easily be done a few weeks from now. Weâ€™ll follow up on Wednesday, when the bill is likely to be approved and sent on to the House.”
Amazon still on sales streak with Kindles
TechCrunch reported December 15 on a stat that supports what many of us have been suspecting: that, with Kindle, Amazon has been selling up a storm.
The company has been selling roughly 1 million Kindles a week, despite critics of the device who have cited shortcomings and flaws, like the power button that TechCrunch calls “horrible.”
Amazon, which usually does not disclose total sales, is nonetheless bragging about the success of this particular product. In a company press release,Â Dave Limp, Vice President for Amazon Kindle sung the little tablet’s praises:
“Kindle Fire is the most successful product weâ€™ve ever launched â€“ itâ€™s the bestselling product across all ofÂ AmazonÂ for 11 straight weeks, weâ€™ve already sold millions of units, and weâ€™re building millions more to meet the high demand. In fact, demand is accelerating â€“ Kindle Fire sales increased week over week for each of the past three weeks.”
In light of this, it seems unimportant that, as TechCrunch put it, “The Kindle Fire clearly has some issues.” According to a different TechCrunch article, “the Kindle family is actually outpacing the iPadâ€™s post-launch sales rate. The iPad 2 saw a blockbuster initial first weekend with a million estimated sales but Apple quickly ran out of stock, causing a backorder wait of up to a month.”
Amazon, on the other hand, is staying on top of demand and has managed to keep enough Kindles on hand for next day shipping over the holidays.
Facebook mobile ads slated for March
According to the December 13 article, which cites “people familiar with the matter”, Facebook may be bringing its Sponsored Stories (which add friend-generated content about a brand to ads) to its mobile news feed.
With a prospective launch date in March, Facebook would still be well behind competitor Google in launching mobile ads, though the timing would be right for its upcoming IPO, for which Facebook hopes to raise $10 billion.
And though the social network already delayed its first plans for mobile advertising earlier this year, the company’s increased emphasis on mobile right now suggests mobile ads, even if delayed once more, will begin rolling out at some point soon. Bloomberg writes:
“Facebook, which boasts more than 800 million users, is increasing its focus on mobile technology, aiming to take advantage of the shift to smartphones and tablets. The company expects its next 1 billion users to come mainly from mobile devices, rather than desktop computers. More than 350 million users already access Facebook through their mobile devices, according to the site.”
Facebook has declined to comment on the matter.
Mini Apple Rumors
According to DigiTimes, the Apple rumor mill is hard at work again, this time with speculation about a 7.85 inch iPad.
According to the latest talk, the mini iPad, which we first got wind of in October, would be smaller than the standard iPad but still bigger than the Kindle and other comparable tablets, while retaining the sameÂ 1024Ã—768 resolution.
Mashable, which predicts the mini iPad’s release in late 2012, suggests that the smaller device would come in response to the popularity of the Kindle Fire. And, in light of Apple’s past attitudes about little tablets, that theory holds water.
“That was more than a year ago, and things change. The Fire has proven that many people do indeed want a smaller tablet, and everyone would think it a fine joke if Apple went back on that and said ‘we waited until we could do it right.'”
RIM earnings down, products delayed
In light of its third quarter earnings report, and the fact that the release of BlackBerry 10 has been delayed, the holidays may not be looking so merry for RIM.
Though, as TechCrunch reportedÂ December 15, the company’s third quarter did see improvement over their second, RIM has nonetheless sustained a 6 percent year-over-year drop. After a year that saw paltry PlayBook sales and a days-long outage, the decrease is not surprising.
Making the best of things, co-CEOs Mike Lazaridis and Jim Balsillie highlighted some improvements in a release quoted by TechCrunch:
“Despite the challenges faced in the third quarter, the BlackBerry subscriber base grew to almost 75 million customers around the world [...] and we are more determined than ever to capitalize on our strengths to overcome the recent execution challengesÂ surrounding product launches and the resulting financial performance.â€
But their quarterly earnings call also saw another grim announcement for RIM; the release of their new BlackBerry 10 phones will be delayed until late in 2012, according to Mashable. This is particularly disconcerting for the company as much of their hopes of recovering from a disappointing year were Â pinned on the new device.
Despite all the bad news, Lazaridis and Balsillie should be commended for an honorably responsible move that other CEOs in their position might not have made. The co-CEOs announced they would be taking a pay cut as their company moves through this difficult period. Whereas Lazaridis and Balsillie currently earn $1,175,664 a year, that figure will be reduced to $1 in the new year.
The week in studies and reports:
US online holiday spending nears $25 billion
According to data from comScore released December 11, online holiday spending in the U.S. is nearing $25 billion for the season to date, an increase of 15 percent since last year. This most recent week, which ended December 9, hit $5.9 billion in spending and included three days that surpassed $1 billion.
Facebook responsible for 52 percent of all sharing on the web
According to AdAge, Â report released this week by AddThis indicated that Facebook is responsible for roughly 52 percent of all sharing across the web. Twitter accounted for 13.5 percent of sharing, up 577 percent from last year.
Green Monday sales up
Research from ChannelAdvisor found that its customers experienced a 19 percent growth in online same-store sales on Green Monday,”traditionally the last day to purchase gifts online in order for items to arrive with standard shipping before Christmas.”
Ecommerce as whole also grew by 19 percent this year, while Amazon and eBay saw a 45 percent and 10 percent year-over-year increase, respectively.
79 percent of UK internet users shop online, 17 percent research holiday travel on mobile
According to an Ofcom study of British consumer behaviors, 79 percent of internet users in the UK purchased goods or services online in 2010, the highest figure in all of Europe.
Meanwhile, a separate UK study from Tealeaf (cited by Econsultancy) found that, in the last year, 17 percent of UK consumers have used mobile apps or websites to research travel purchases, “thoughÂ just 3% make a booking on their phones, which suggests travel firms need to improve their mobile services.”