Will Facebook Be Good For Fashion

That’s the $104 billion question as the social-networking site’s initial public offering takes off today, priced at $38 a share and potentially raising $16.4 billion — the third largest in financial history. While pundits have spent the last few months poring over the most minute aspects of the Internet phenomenon — including how rich its backers and founders will be after today — the biggest issue is whether Facebook will have the long-term transformative and dominating impact of Google or Amazon — or be more like Yahoo or eBay.

The fashion world, like almost every other industry, is still trying to figure that out. There’s talk surrounding where Facebook will focus its energies with its increased cash flow, ranging from further developments in its open-graph technology to further engagement, to mobile innovations to fuel brand partners’ brick-and-mortar shopping experience, to improving client account management services for companies. Observers also believe Facebook will become more aggressive in pushing its advertising model, stirring even greater competition with traditional media companies.

At the moment, most brands have simply focused on the race to accumulate the most “likes” on their fan pages and to encourage engagement — even those like Burberry and Sephora that advertise heavily on the site. How quickly Facebook can convince brands it can be more important to them than that will be key to its ongoing growth — especially since it’s now widely accepted that early attempts to encourage e-commerce via Facebook have been a flop.

Maureen Mullen, director of research and advisory at NYU think tank Luxury Lab, or L2, said that the “dirty little secret” industry-wide is that companies have been spending money on advertising on the platform for a while, with Burberry leading that charge. The brand has been an aggressive advertiser on Facebook in the fashion world in the past 24 months, as have Chanel and Gucci. While this has greatly contributed to creating an aspirational aura around the value of Facebook, she thinks it is too early to know exactly how the IPO is going to play out with respect to the fashion and luxury sectors.

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