Wednesday, April 11, 2012

Facebook Should Keep Buying Companies

Terrific article in today's Wall Street Journal posing the question in its headline, What Facebook Should Buy Next.  Company acquisitions, both for the acquiring company and the one being acquired, requires great work to integrate and grow.  Different cultures, different core missions, different executives all trying to blend together into a new union with a common goal.  Some acquisitions are successful; others like Fox's acquisition of My Space, prove disastrous.

Google is figuring out what they need to do with their acquisition of Motorola Mobility.  The former is a search engine and open software company, the later a hardware manufacturer.  Time will tell whether a blended company will work or if Google will sell off the pieces that don't matter to their business.  Facebook will now take on Instagram; but the question posed for Facebook is what else should they being doing to grow.

I love the direction that the author is taking.  If content is king and if Facebook has rich data on users, the next piece is the content to drive the advertising engine.  "Facebook should buy ABC, CBS and NBC. It should buy the New York Times website and the satellite radio broadcaster Sirius XM. It should buy a stake in Microsoft's search engine Bing. It should buy Pandora, Spotify, Hulu and any other digital platform where Facebook can follow users and hit them with targeted ads using their Facebook data without it seeming like Facebook is doing it."  Add to that any number of large cable networks too; the end result is that owning the content with the social engine of Facebook could be a boon to advertisers.

The question is can Facebook do more with their data by owning content then they do now as a third party linking to all content across all platforms.  Does ownership imply that their are other hurdles that could be best  managed when linked together by common management?  If it takes ownership of a content brand to unlock that value, then it sounds like a good investment.  But if it can't be better quantified, than perhaps the current relationship just needs to be further tweaked and improved to unlock that consumer information to the content they consume, owned or not by Facebook.

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