$16 Billion Later, Facebook Eyes Local

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Facebook’s IPO on Friday may have fallen short of analysts expectations, but with $16 billion in new funding, the social network is set to come out firing over the next few months. Whether or not Facebook can justify a $105 billion market cap is, in many ways, less important than the tectonic impact its decisions will have on the digital ecosystem — the company’s revenue roadmap could recalibrate the competitive dynamics of a handful of industries — hyperlocal included.

As Local Response’s Nihal Mehta told me in January, the IPO should kick-off a wave of new innovation around monetization tools for Facebook: “I think they have a very specific plan to make sure that revenue is growing at an exponential rate in the years after they go public,” he said. We’ve already seen the company release a reconfigured offers product earlier this month, and a still-denied-yet –seemingly-inevitable offsite ad network, which would threaten AdSense’s death grip on local online advertising, could be on its way.

By now, we’re all quite familiar with Facebook’s dark spots — namely, the difficulties with mobile advertising and its trouble convincing brands to cough up the cash for paid products. But as far as hyperlocal ecosystem is concerned, Facebook’s approach to self-serve could be the most important story to watch over the next two years.

As my colleague Alex Salkever wrote in March, the myth of the “digitally dumb mom-and-pop” is being debunked, albeit slowly. Self-serve in hyperlocal remains a tough nut to crack, but the digital literacy of the SMB segment appears to be heading in the right direction. If Groupon’s ascent shows us anything, it’s that a company with a mountain of cash and an innovative product can change the spending habits of small merchants in a relatively short amount of time.

Facebook’s mountain is far larger.

If we take Facebook Offers as indication of the company’s forthcoming plan of attack in the local space, self-serve, in one form or another, will be at the core of its strategy. The company will likely invest heavily in educating merchants about self-serve advertising, and, with Offers, help teach merchants about the fundamentals of commerce-based marketing.

As long as your name is not Google, Facebook’s coming assault on the local space should be an “all boats rise with the tide” moment. Not only should Facebook’s spend warm SMBs to the growing field of technology-driven start-ups pitching self-service tools but also, the company’s decision to remain high in the stack opens opportunities for merchant-service to bring the company’s product to market.

With Foursquare set to launch its ad network in early summer and Google, Yelp, Facebook, and Groupon all focusing on monetization, the days of free hyperlocal marketing services, and the fragmentation that ensues, appear to be coming to an end.

Steven Jacobs is an associate editor at Street Fight.

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