By now, much of the connected universe, and certainly all of technolphilia, is aware of Facebook’s IPO, which seeks to raise up to $5 billion (and perhaps eventually $10 billion) when its shares go public this spring. The net effect is a valuation of $75 billion to $100 billion for the 8-year-old social network.

Mining the 150-page S-1 for gold can be something of a scavenger hunt. Of course, Facebook’s user reach and engagement metrics explode off the document: 845 million monthly active users (MAUs) as of December 2011, 483 million daily active users (DAUs), 425 million mobile MAUs (as detailed by MLM’s Mike Boland), 2.7 billion likes and comments per day, and the list goes on. Facebook’s engagement stats — and the data that those enable it to collect about its audience and on behalf of its advertisers — is the envy of companies everywhere.

Also, its $1 billion in net income was a conveniently round and easily discoverable number. But probing deeper, the data told other narratives as well: some promising, others alarming and several yet to be determined.

The Good

Facebook’s top-line revenues continue to grow, as one would expect with a maturing network whose domestic and global reach is ubiquitous. Revenues eclipsed $3.7 billion in 2011, an 88 percent increase year over year. Advertising jumped 69 percent from 2010, with 56 percent of that U.S.-based. Perhaps more encouraging was its deepening payments business, which now accounts for 15 percent of Facebook’s total revenues, skyrocketing from $106 million to $557 million in just 12 months.

Facebook also already boasts $3.8 billion in cash on hand, and that number is about to multiply.

The Bad

Although $3.7 billion in revenues seems like a handsome haul, the top-line number actually came in lighter than many analysts expected. The 69 percent increase in ad revenues looks modest when noted that this stream boomed by 145 percent from 2009 to 2010. And that was even as Facebook boosted its total ads delivered by 42 percent and average price per ad by 18 percent.

Meanwhile, it is not realizing meaningful money from its 425 million mobile users. Facebook is in the strange position of both attacking and defending on mobile platforms. While it continues to enhance its apps suite and build new mobile products, and will soon place Sponsored Stories ads within mobile news feeds, it also wants to refrain from cannibalizing the ads business it has amassed on the desktop. As a result, substitutive mobile growth is listed as a risk factor.

The (Unknown) Future

Facebook’s future appears as uncertain as it is promising (and vice versa). Naturally the company must continually calibrate its monetization engine, and quickly unpack new revenue sources (as it has with Facebook Credits over the past two years). Here are three domains that we feel Facebook may address with its newfound cash and investor pressure:

- Ad Network: Facebook’s reach is undeniable. Its user data trove is deep, perhaps unparalleled. And thousands of third-party sites have linked to Facebook’s platform through Connect, a single sign-on conduit that can socialize a website experience based on the user’s Facebook social graph. Mash it all together, and an ad network — both desktop and mobile — seems irresistible and inevitable. For now, we’ll call it “Facebook AdSense.”

- Payments Expansion: Facebook has already ported its Credits currency beyond gaming and virtual goods to digital products such as movies and music. Now, will the network usher Credits into real-world goods and services, making it a full-service social commerce portal? It toyed with the idea during its short-lived deals trial last summer, in which Credits were a payment option (though not the only one). Expect many experiments to come.

- Local: Facebook has never shown the propensity to build a sales force of the mass and scope necessary to exhaustively address local markets and SMBs (as opposed to say Groupon). Even its deals play was an aggregated approach through partners. However, it does collect much of its advertising revenues from small and mid-market businesses that self-serve on the platform. Now it has opened up its Ads API to all qualified developers, enabling more partners with local audiences (agencies, media, etc.) to manage scaled ads campaigns on behalf of a fleet of clients. As just one example, French directory publisher PagesJaunes recently joined the API program.

A more enterprising probe of the S-1 will publish to Social Local Media clients in the coming days.

The local display ad companyPaperG today unveiled a deal with AOL to offer its local display advertising technology via Patch, AOL’s hyperlocal platform.

The PaperG solution offers the ability to create a locally targeted display ad with only the businesses name and address as a starting point. PaperG then crawls and aggregates the content necessary to build an ad. This is an attractive proposition for an operation like Patch, which has hundreds of hyperlocal sites in U.S. suburban communities, providing news and community content.

PaperG has formed multiple relationships with local media properties looking for simple local online advertising products for their customers.

Some of PaperG’s existing media partners are the Los Angeles Times, MediaNews Group, Lee Enterprises, Sun-Times Media Group, Hearst, McClatchy, Gannett, New York Times Regional, Boston Globe, Newsday and New York Post.

In the afternoon session at the BIA/Kelsey DMS conference on Wednesday afternoon, two players in the local search industry talked about the growing local display market and the use of display by SMBs. Moderated by Matt Booth of BIA/Kelsey, Tyler Bosmeny from PaperG and Warren Kay from iPromote spoke about the increasing use of display advertising by SMBs. Specifically, these industry participants talked about the improved efficiency that is occurring as this industry matures.

According to the most recent BIA/Kelsey Local Commerce Monitor survey, 11% of all SMBs use online banner or display advertising. Both Tyler and Warren agreed that it is an incredibly growing method for SMBs to get information out about their product or service.

One reason for this growth has been the significant increase in the inventory of display advertising that has been generated by social networks. This increase in inventory has naturally led to lower prices for this advertising, making it a more “doable” buy for many SMBs. An additional benefit of the increased inventory has been the ability to better able “dice and slice” this inventory either geographically or by different demographics. Having a more targeted audience for display advertising makes it much more desirable for SMBs.

What’s the future for display? Will it be larger than search for SMBs? Of course, that will be seen. But, the feeling of the panelists was clearly that local display will become an even more important vehicle for SMBs to attract and retain its customers.

Over the past year, American Express has embarked on a series of initiatives centered on digital advertising intelligence for SMBs. These include SearchManager (via Clickable) for SEM and multiple social media experiments with Facebook and Foursquare. Now, its small business-focused OPEN division is rounding out the suite with AdManager, which utilizes AdReady’s dynamic display capability to enable merchants to more effectively leverage the format.

Amex OPEN VP Rob Ciccone told BIA/Kelsey that the platform aims to solve the two chief problems that prevent SMBs from actively and effectively incorporating display: It’s “too complex and too expensive.”

AdReady has simplicity in mind with the dashboard it is furnishing to address these problems. Businesses can choose from hundreds of ready-made templates that can be quickly customized. Once the creative is in place, they can then pick from multiple forms of targeting and select media sources for placement across established networks (Yahoo Network, Google Network, DoubleClick Exchange and more). Facebook campaigns will also be included. Banners ads with video and animation are available as well.

The goal is a self-serve vehicle that any SMB can feel comfortable using. And, as Ciccone emphasized, the basic AdManager tool is available to all SMBs, not just OPEN cardholders. Premium tiers, with dedicated advisers for more complex campaigns, are also available.

The jury on the future of display is still in deliberation, with some retailers decrying its static and hard-to-track characteristics, while others, such as Google Chairman Eric Schmidt, extol it as a booming opportunity (Schmidt’s market forecast: $200 billion).

We see display in the throes of an evolution that ultimately could prove revolutionary to its long-term relevance. This can occur as creative, formatting and targeting all push forward by incorporating more dynamic rich media forms and leveraging the social graph for deeper consumer insights.

ReachLocal announced Wednesday that it entered a strategic alliance with SureFire Search, a New Zealand marketing agency that works with small and medium-sized businesses. The move will expand ReachLocal’s global presence, which includes online ad campaigns in the United Kingdom, Germany and Australia.

ReachLocal trained SureFire Search’s sales force to deliver its products and services, including ReachSearch and ReachDisplay, to New Zealand businesses. ReachSearch delivers local advertisers’ marketing messages through ads across popular search engines like Google, Yahoo and Bing. ReachDisplay allows local businesses to reach customers using display advertising on publisher sites like Facebook.

The New Zealand Ministry of Economic Development reported that small and medium-sized businesses employing 50 or fewer employees in 2009 accounted for 99 percent of total businesses in the country. Yellow Pages New Zealand has long enjoyed a favorable market position with small-business advertisers as the country’s dominant directory publisher. But YPG’s online directory market share may decline with an international player like ReachLocal offering search engine and display advertising to its core advertisers. Another new entrant to the local online space in New Zealand is Localist, which is backed by the New Zealand Post.

Centro, a pioneer in local online ad placement for national marketers, has received $22.5 million in equity financing from FTV Capital. The money will go toward expanding its regional sales presence and also toward software development.

CEO Shawn Riegsecker tells us that he anticipates adding six to eight regional offices to its existing roster of 18 offices, and doubling its sales staff from 40 to 80 personnel. “We’re helping bring the regional medium tier to the Internet,” he says, noting that the Chicago-based company works with 350 agencies and 1,100 advertisers.

Indeed, Centro’s largest growth has been among regional advertisers, including banks, hospitals, telecom, and oil and energy companies, he says. While the company has made a big push toward getting its agency software for non-local online media adopted, Riegsecker notes that 90 percent of the company’s revenues still come through Centro Media Services.

“We’re seeing three things happen in the next five years,” he says. “First, we’re seeing the movement of brand advertising to the Internet.” Secondly, Centro sees premium display ads doubling in the next five years. The third thing is that local advertising, including regional and local-local, will boom as combination of display, brand and local placement.

Mobile and video will come along with that, adds Riegsecker. “The problem with video is that there isn’t enough inventory,” he says. Search also plays a factor, and is very useful, but it is a “very mature market in respect to display,” he says.

To date, most location-specific advertising requires in-store check-ins to unlock discounts and special offers. Naturally, that necessitates having a storefront that lends itself to walk-in — and check-in — traffic. Foursquare, Gowalla, Loopt and others have garnered first-mover hype with these location-based services but have struggled to achieve mainstream adoption beyond the tech elite.

JiWire is extending geotargeted opportunities to brands that have a local presence but may not have a storefront with a sign bearing their name. The public Wi-Fi network provider is introducing Compass, an advertising platform that creates a geo-fenced, ad-in-app interactive experience for users, allowing them to discover nearby brands and then connect with them.

Compass is a direct outgrowth of JiWire’s recent acquisition of NearbyNow, one of several companies (eBay’s Milo, Google Product Search, Krillion) competing to showcase real-time product inventory at store level. Fusing NearbyNow’s capabilities, Compass enables its 40 million on-the-go users to survey brands that are in stock at local stores, then engage them directly. These behaviors include accessing walking and driving directions, clicking to call or text a retailer, reserving and/or purchasing products, and booking appointments. Advertisers can layer on additional content such as promotional videos as part of customized tabs that they build out.

David Staas, JiWire’s senior VP of marketing, told BIA/Kelsey that the integration of NearbyNow allows JiWire to generate “advertising with location content as part of the overall message.” The implications are a more delightful customer experience and a potential move to performance advertising models based on the actions that the ads can motivate. Ads will be sold on a CPM basis to start.

Here’s how it works. JiWire’s networks serve a mobile, tech-savvy clientele in public places such as cafes, coffee shops and airport lounges. These users are shown standard display ads. But when they click through, the ads expand into a full-screen, app-like experiences. JiWire-NearbyNow synergy kicks in when the app is launched, as Compass uses geo-fencing technology to target a user’s location to present location-relevant store information and product data.

Launch partners include Clinique, HP, Ritz Camera and Groupon. JiWire struck an agreement with the deal-a-day giant last week to generate neighborhood-level deals … a fit for JiWire’s transient audience. For Groupon, the pact marks a new level of geographic granularity.

More generally, the implications could be numerous. Check-ins could be scaled to a wider base (JiWire’s 40 million customers to Foursquare’s 4 million) and scaled to businesses with strong brands but without storefronts. It also broadens the opportunity beyond retail outlets and into a variety of franchise industries. Furthermore, it begins to close the loop on LBS and social buying. Geo-fencing locates consumers at neighborhood level, feeds them an array of search-and-shop options, and offers related deals.

Back in April, I talked to 4Info CEO Zaw Thet about a number of mobile themes and the directions in which he’s taking the company. One of those directions was diversification beyond its flagship SMS content and ad serving.

4Info is the 800-pound gorilla in SMS but has been recently moving into mobile display ads as that market grows. This is a function of mobile Web and smartphone growth, where rich media content naturally hold bigger opportunities than the larger — but slower growth — SMS arena.

Along these lines, 4Info made a couple of announcements today. First is the official launch of the next generation of its AdHaven mobile ad network and distribution platform. This includes a greater focus on display ads and “one stop shop” approach for mobile ad serving.

Second, and related closely, is the spotlight on new Nielsen data that surprisingly rank 4Info second among mobile ad networks for display ad reach. I say surprising because, again, the company is known as a heavy hitter in SMS but is rarely mentioned in the pantheon of display ad networks.

Specifically, Nielsen pegs 4Info at 63 million uniques, reaching 75 percent of the active mobile population. On this measure it beat out AdMob (Google), Quattro (Apple), Jumptap and Microsoft’s mobile ad network. It came second only to Millennial, which reaches 71 million uniques.

Besides all of the implications for growth and diversification, the thing that jumps out of this list is the eligible receivers for acquisition. We expect M&A activity among mobile ad networks to continue as online giants look to buy their way into mobile ad distribution and positioning.

The remaining independents on this list include Jumptap, Millennial and 4Info. There have been rumors about RIM eyeing Millennial and we could see activity in the space from other potential suitors that include Microsoft and the media companies further down Nielsen’s list.

M&A activity aside, 4Info is clearly on an impressive path and making the right decisions when it comes to positioning its network for growth. Zaw Thet will join us on stage at our upcoming Interactive Local Media conference to tell us more. Hope to see you there.

Image Credit: TechCrunch

With more than half of its 65 million users listening from portable devices, Internet streaming leader Pandora sees massive opportunity in mobile. In its latest move to tap that potential, the company is partnering with AdReady to introduce geo- and demo-targeted audio and display ad opportunities for local businesses.

VP of Sales Brian Mikalis told BIA/Kelsey that Pandora receives frequent outreach from local and regional merchants that are active users of its customized streaming services on their own mobile devices and wonder “how do I get my ad there?” AdReady’s tools will be used to “more efficiently get campaigns running,” primarily through building out display banners.

Local buyers can purchase audio, display, or bundle them. Mikalis underscored the value of having these dual formats complement and cross promote each other. As an example, an audio spot can encourage users to “tap on the banner ad” to engage in certain activities or enjoy exclusive rewards. Also, the ads couple registration-based geotargeting with basic demographic targeting (age, gender).

Mikalis said that Pandora is working on new solutions for geotargeting based on the real-time location of the phone rather than the registration ZIP code.

Advertiser demand for Pandora’s online and mobile platforms has mushroomed to the point that the company has doubled its SMB inside sales team, which is based in its Oakland, California, headquarters. Early adopters among local advertising categories include universities and cultural/entertainment centers (Mikalis cited a local aquarium and a performing arts center as relevant examples).

Pandora has made recent efforts to extend its service beyond the PC. Beyond mobile, it is pursuing several auto installation deals and is offering its advertising network across connected TVs and Blu-ray players through set-top box and middleware providers such as Roku and Google TV.

Mikalis and Cheryl Lucanegro (Senior VP of Advertising Sales), will cover this and other developments during a keynote address at BIA/Kelsey’s ILM ‘10 conference Dec. 7-9 in Santa Clara, CA.

For iPromote CEO Michael Barr, “a picture is worth a thousand words.” Now he’s trying to convince third-party publishers, and the local clients they represent, that it’s a no-brainer to serve keyword and location-based display ads alongside the text-based search ads they are already running. This is expressly what iPromote does with its LocalSearch offering.

Barr believes the answer is automated ease-of-use — that simplicity creates scalability. Only then will large-scale sellers add display to their toolkit and SMBs embrace it. The LocalSearch solution is built around the core idea of taking the work out of display while still producing fast, targeted ads to fulfill inventory needs and satisfy ROI demands.

A local merchant’s Web site or business listing URL is inserted, iPromote uses a combination of the client’s information and its own database content to create a display ad, and the publisher or business then pinpoints where and when the ad will run and the campaign budget.

The geotargeting built into the interface means that when a user queries a particular term and location, a locally and contextually relevant display ad will serve. Location-aware features enable “locally relevant display ads,” which, according to Barr, convert at a 2-5 times higher rate that generic display.

Image Credit: iPromote

The ads can be branded with either the publisher’s or the advertiser’s name. A dashboard allows for real-time campaign management and ready-made changes to ad content (drag and drop new photos, revise the business description, etc.). Ads are also optimized for mobile platforms.

IPromote is already in motion with several partners, and Barr has set a high-priority goal of attracting major IYPs and local search directories to the service … those that serve thousands of SMBs. These publishers would reserve display real estate on their search results pages and subsequently be able to bundle display offerings with existing search campaigns to drive down the cost of lead generation.

Once publishers place the ads on their own sites, they can then select other locations to distribute the ads. They can also blast them out across the iPromote Ad Network, which includes Yahoo, Bing, CitySearch, Local.com and many more publishers.

Barr and his team are banking on resurgent growth in the display market, and recent data show he’s on to something. This week, IAB reported that display-related advertising revenues for the first half of 2010 rose almost 16 percent year over year.