Facebook IPO: Has Mark Zuckerberg left users open to a barrage of adverts?

Social network Facebook has floated on the US stock market amid fears its millions of users will now be plagued with more advertising in order to generate bigger profits.

Before the floatation - known as an Initial Public Offering (IPO) - started on Friday afternoon, Facebook was given an initial valuation of more than $104 billion.

Such a massive figure has however raised fears it will forced Facebook bosses to increase the amount of ads they run.

Financial experts say there will now be a conflict between keeping the shareholders happy and ensuring its 901 million members worldwide do not leave and user numbers continue to grow.

This battle between profit and usability is important because the massively-popular site must now ensure it makes money to repay the investment - and a simple way of doing this would be through more advertising.

But it's the ultimate Catch 22: if the ads become too intrusive and begin to interfere with the enjoyment people gain from spending time within Facebook's virtual walls then user numbers will drop and so in turn will the site's profit and value.

Richard Holway, chairman of tech industry analysts TechMarketView, argues the key to the floatation passing muster for the ordinary Facebook user is the widely-held belief its boss and founder Mark Zuckerberg is not motivated purely by money.

Mr Holway explained: "Most people I know in tech aren’t doing it for the money and we can assume that Mark Zuckerberg also isn’t after the billions which is why the user experience will unlikely change just because Facebook lists."

But he warned: "Facebook has to monetise to survive – especially the mobile experience. Facebook users already dislike the ads and intrusion and I feel an increasing backlash against that coming on.

"Ultimately the IPO means that Facebook has to grow up, yet most users liked it when it was in its juvenile stage. Will they like Facebook as a responsible, profit-making adult? Or will they search out a new young site that better suits their needs?"

Facebook's shares initially went on sale at $38 rising to about $43 dollars in the first few minutes before dropping back within the first hour to hover around its initial price.

Its valuation dwarfs many established multi-national companies established for far longer than the site's seven years.

And according to financial giants Bloomberg it also means Zuckerberg is now wealthier than Google creators Sergey Brin and Larry Page, with Bloomberg research ranking him as the 29th richest person on Earth.

One good piece of news for Facebook users is the floatation is expected to raise more than $15 billion that will be reinvested back into the site through new launches, new technology and new acquisitions such as the recent purchase of photo-sharing app Instagram.

Rebecca Quinn, Director of EU Strategy and Operations at social media marketing company Wildfire, believes it is a positive move both for Facebook and those who have their whole lives, rather than their own cash, invested in it.

She explained: "What really matters for the user is the day-to-day interface. The IPO means Facebook can now take bigger risks and drive a huge amount of innovation in the site.

"For an online media company Facebook is relative mature and it had stocks and shares already traded on a secondary market. The initial valuation is based on the company's potential.

"Facebook is where it is today because it has done a great job of engaging its users, so I wouldn't say it puts more pressure on them, the value is more a reflection of the potential investors see in the vision they have."

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She added: "It will certainly be looking for new innovative ways to monetise the platform but their userbase is their biggest asset. The last thing they'd want to do is degrade their customer experience with more and more adverts.

"They will be looking for new interesting ways to engage their users, as opposed to flowing ads all over the interface."

In fact, one thing to worry Zuckerberg may be that last week General Motors removed its paid-for advertising from the site, claiming it wasn't helping them to sell more cars.

Despite this Miss Quinn said the future looked good for Facebook and its users. She said: "There are already a number of brands working hand-in-hand with Facebook to innovate on the platform. The brands who have been successful to-date know their audience and they engage their fans and leave them wanting more. It's an art not a science - that not every brand has mastered yet."

Ernest Doku, technology expert at uSwitch.com, agreed the IPO was good news but believes caution is needed.

He said: "Historically Facebook's model has been about growing the number of users and enhancing their experience, not monetising every last inch of the site.

"With shareholders entering the equation, that may now change. They will want to see that Facebook doesn't miss out on the potentially huge source of revenue that mobile ads, customised to users' likes and locations, would provide.

"So Facebook faces a delicate balancing act if it is to keep both profit-focused investors and loyal users happy. And if it puts a step wrong, everything could come crashing down."

He added: "Facebook is close to achieving the holy grail of advertising platforms – the ability to weave brand messages into the fabric of people's social lives.

"The firm is already making inroads in the mobile app world. It has launched an app store and is attempting to buy the photo-sharing service Instagram. Facebook needs to ensure that it continues to move with what consumers want, which is to be able to access their favourite websites whilst on the go."

And Miss Quinn feels it is great news for the business of social media as a whole. She said: "What is very exciting is this floatation sees social media truly legitimised. We are seeing a movement into showing how social is here to stay, when it has been seen as a fad in the past.

"This IPO creates a legitimate eco-system for greater investment in social as a whole and a number of companies in that space will benefit and continue to innovate and grow. In the course of the next 24 months, we will see more companies go public."