The past week has seen some frantic activity among leading IT and social networking companies.
Microsoft is working hard to keep itself at the forefront of the dynamic changes in a market increasingly driven by social media. News that Microsoft has bought Skype in a deal worth 8.5 billion dollars is setting the pundits speculating on the likely benefits and downsides of the deal. Many are wondering whether 8.5 billion dollars is too high a price, but given Skype’s user base of some 660 million and the benefits it might provide Microsoft in the tablet market, it may well prove to be a shrewd investment. And let’s remember that Skype like Google and Hoover has acquired that rare status of seeing their proprietorial brand name become a generic term for a particular activity. We all know exactly what is meant when someone talks about googling a term or skyping someone.
Facebook also seems to be going from strength to strength and has been predicted to generate display advertising revenues of 3.5 billion dollars in 2011, a 95 per cent increase on 2010. This will set it on course to becoming the the largest display ad provider in the world. Giving an impression of how far Facebook has come, Google is expected to see advertising revenue of 2.6 billion dollars in 2011.
Apple is another company putting Google in the shade, having claimed the status of most valuable brand in the world. According to Milward Brown Apple is now worth 153 billion dollars, an 84 per cent increase on last year. Much of this increase is attributed to the success of the iPad and its online Apps store. Millward’s joint feature with the Financial Times makes for interesting reading with regard to the value of a strong brand in difficult economic times.
It has not been a good week for Google as its advertising system is being investigated by the US Justice Department. This is following on the heels of an ongoing investigation by the EU. While the capability for targeting specific consumer groups is highly attractive to advertisers, it would seem it is also open to abuse and is causing regulators problems. Competitors, including Microsoft’s Bing, have accused Google of configuring its 
search listings so that they give precedence to its own services, and in the process effectively diminish the attractiveness of advertising with other search engines.
Last, but by no means least for the business community, today sees the IPO of LinkedIn. Used by an increasing number of people as a networking tool, LinkedIn is being taken to market with an anticipated share price of between 42 and 45 dollars. This will value the company at some 4.3 billion dollars, a valuation that some investors see as being rather on the high side. Time will tell whether LinkedIn’s functional attributes keep pace with it’s perceived value as an advertising medium.
On a more disconcerting note, the frenzy of activity in the sector more generally is causing people to recall the dotcom bubble at the turn of the Millennium and the more recent housing bubble. While we might be desperate for good news on the economic front, it’s important that the market stays realistic when it comes to working out what price it is prepared to pay for the latest high-flying brands and whether they have the potential to last the distance.
For a neat summary of how social media is changing the face of advertising check out BBC’s Rory Cellan-Jones post on the topic earlier this year.
