In a letter sent to the Securities and Exchange Commission Friday, Emmeryville, Calif.-based MobiTV asked that the IPO bid it filed last August be withdrawn immediately based on “unfavorable market conditions.”

Unfavorable? Well, maybe …

As Bloomberg noted, the Standard & Poor 500 Index has gained 3.5 percent since the end of May, when Facebook floundered with its IPO. During this period, ServiceNow Inc. went public and has seen its stock price jump 34 percent since last month. Meanwhile, Palo Alto Networks Inc. and Kayak Software Corp. are proceeding with IPO plans next week.

Also read: MobiTV’s IPO filing is not a pretty picture

MobiTV has never been profitable — it reported an $11.8 million loss last year even though its revenue rose 27 percent to $85.1 million.

And not only must MobiTV compete for customer attention with online video companies like YouTube and Netflix, and others like Aereo that are only emerging, its business model is beholden to large wireless carriers to which it partners with for distribution. In 2011, 97 percent of its revenue came from Sprint Nextel Corp., T-Mobile, AT&T and Verizon Wireless.

The company conceded at that time:

“If any one of these Tier 1 customers chose not to continue to use our services, or limited its use of our services, or if it replaced our services with a service provided by another company or by the customer itself, it would be difficult or impossible for us to replace that revenue because there are a limited number of such Tier 1 customers. Any such development would harm our business, operating results and financial condition.”

If there’s one question on which much of Facebook’s $60-billion market valuation hangs, it is whether the kind of “social advertising” the giant network offers to brands actually works or not — in other words, whether having fans and social discussion around a product translates into actual measurable sales. Facebook has now released some actual data from comScore that it says proves the value of building up a fan base on its platform, since doing so appears to increase the likelihood that a user will buy something later. But will the research convince advertisers to devote more time and money to Facebook’s social campaigns? And if so, how much of that will benefit Facebook directly?

The comScore study, which is called “The Power of Like 2: How Social Marketing Works,” (PDF download available here) is the second in a series the web-analytics firm has done with Facebook. The first report came out last July, and argued that brands using the social network need to do more than simply build up a large fan base — they need to use a combination of paid and “earned” media (that is, content that is shared voluntarily by users) to promote whatever marketing message they are focusing on. The latest report is an extension of that case, with some statistical database on what Starbucks and Target have seen from their Facebook campaigns.

Fans of a brand buy more, and so do their friends

According to comScore, Starbucks saw a “statistically significant” improvement in purchasing behavior in its stores in the weeks following exposure to promotional content on Facebook. Perhaps most important of all, the analytics firm said this behavior was seen not just among those who were already fans of the brand on the social network, but also among friends of those fans — evidence of what comScore called a “latent branding impact.” The same kind of impact was seen in a study of buying behavior at Target stores, comScore said.

In a nutshell, the report says that by the fourth week following the exposure of fans and friends of fans to certain advertising content — whether in a “sponsored story” or some other social ad format — the test group’s purchasing rate of 2.12 percent was a little over half a percentage point higher than the control groups’ rate. According to comScore, that means the social advertising on Facebook drove an increase in actual sales of almost 40 percent.

As Peter Kafka of All Things Digital notes, the comScore research is a bit of a double-edged sword for Facebook, since it shows that “earned media” — that is, the kind of social sharing that in many cases brands don’t even have to pay for — can generate a substantial bump in sales all by itself, without the need for traditional display ads. Theoretically, that’s the kind of ammunition brands like General Motors could use to justify dropping their ad spending on Facebook and relying on social sharing of their marketing content instead.

Facebook display ads work too, says comScore

One of the comScore study’s conclusions seems to be aimed directly at this idea — and also at critics who question whether Facebook’s paid ads are effective when the click-through rates on them are so low (even lower than the rates on generic web advertising). The report notes that an analysis of the data showed “statistically significant” increases in both online and in-store purchasing for a major retailer after exposure to display ads, despite the lack of clicks, and that this “highlights the importance of using view-through display ad effectiveness in a medium where click-through rates are known to be lower than average.”

Facebook’s Brad Smallwood, head of measurement and insight for the social network, was more blunt in a comment to the Wall Street Journal about the results of the comScore research, saying it proved that “It’s a myth that Facebook advertising doesn’t work.” The Journal also noted that the quiet period following its initial stock offering has ended, so Facebook is now able to respond to some of the criticisms that arose during the IPO roadshow, and the comScore study is clearly part of that effort.

One thing the study also reinforces is just how much advertisers are betting on Facebook: according to comScore’s analysis, more than 15 percent of all U.S. online display ads were “socially enabled,” meaning they contained a message asking viewers to “like” or follow the brand or the campaign on Facebook. That’s almost double the number of ads that contained those kinds of messages in November of last year, the report said. That kind of bet is what drove Salesforce to spend close to a billion dollars to buy Buddy Media, which specializes in managing Facebook pages and social campaigns.

The “uplisting” of the over-the-counter stock, which closed Tuesday up over 6 percent to $5.25 a share, is a milestone for the company, which was founded by World Wrestling Entertainment scion Shane McMahon and now has a 20-year contract with the Chinese government to run nationally sanctioned VOD services in the country.

Also on Tuesday, YOU On Demand announced the addition of two new members to its board of directors: veteran TV executive Michael Jackson, who once served as president of programming for Barry Diller’s InterActiveCorp.; and marketing and brand strategist Michael Birkin.

Concurrent with its listing on the Nasdaq, Marc Urbach has relinquished his title as director of the company and will now be listed as president and CFO.  

Also read: Chinese theatrical market booms, but the real action may be in video on demand

Headquartering its Chinese operations out of Beijing, YOU On Demand has positioned itself is one of the more vital distribution hubs for U.S. films, with studios including Warner Bros., Disney, Lionsgate and Magnolia signing output deals with the company within the last year.

Like other foreign companies entering the Chinese market, YOU On Demand is accomplishing its goals via a joint venture — in this case with the Chinese broadcaster CCTV-6 and its pay-TV arm, China Home Cinema. Through that partnership, YOU On Demand’s VOD service is already in 3 million Chinese cable homes equipped with digital set-top boxes via carriage deals with four local cable systems. It is the leading transactional VOD service in China, controlling about 88 percent of the market.

By the end of 2012, YOU On Demand expects to be in 12 million homes with additional cable deals in place. YOU On Demand currently charges consumers anywhere from $1 to $3 per movie rental, but hopes to increase that to $3 to $5 as more Chinese consumers get used to legally paying to watch American movies. Meanwhile, the company is playing both ends of the business-model spectrum, with plans to also launch a Netflix-like subscription VOD service sometime later this year.

The overall market appears to have shrugged off the social network’s misfortunes as both the Dow Jones and the Nasdaq have posted modest gains.

Facebook’s latest swoon does, however, appear to be pulling down its ill-starred step-brother, Zynga. The social game maker has fared even worse than Facebook, falling nearly 15 percent today alone.

FB data by YCharts

Facebook’s underwhelming performance since going public have set off recriminations and lawsuits between the company’s bankers and investors who accuse Facebook of failing to disclose that its growth prospects were slowing.

Facebook’s flop has set off hand-wringing about the prospect of a new tech bubble or a gloomy market for future IPO’s.

As ReadWriteWeb reports, however, not everyone can come bolting out of the gate. Its three year post-IPO chart, which shows a slumping Apple and a soaring Yahoo, underscores how share price may not be the best metric of determining a company’s long term value.

Facebook closed down nearly 10 percent at $28.84 while the overall market finished up around one percent.

After growth slowed just in time for its IPO, Facebook must look overseas for a jump-start.

Target countries are easy to see. ”Now there are only five markets where Facebook is not the #1 social networking site,” a comScore spokesperson tells paidContent.

But cultural differences, government restrictions and incumbent local rivals will all make Facebook’s growth challenging. (Check out our broader take on Facebook’s international ambitions here.)

Here is our map for Mark Zuckerberg’s overseas adventure. Cool countries are those with already-high Facebook penetration, hotspots are thosse Facebook must crack to become a true global powerhouse…

1. China
”near 0% penetration”. Growth prospects: Poor — Zuckerberg can’t comply with online state censorship
#1	Tencent Qzone	Built on Tencent’s QQ IM network, Qzone lets users buy a 10-yuan-a-month “Canary Diamond” to decorate their zones with.
#2	Sina Weibo	Hit 300 million microblog users by delighting citizens with open info sharing. Now ready to introduce ads.
#3	RenRen	Billed itself as China’s “leading real-name” social net; now new regulations require all network customers use their real names.
The People’s Republic is the big prize. If it could piggyback China’s explosive broadband and mobile internet adoption, Facebook’s own growth would rocket. But that will be anything but easy. Currently blocked by China, the site claims ”near 0% penetration” there. It warned IPO filing readers: “We do not know if we will be able to find an approach to managing content and information that will be acceptable to us and to the Chinese government. In the event that access to Facebook is restricted, in whole or in part, in one or more countries or our competitors are able to successfully penetrate geographic markets that we cannot access, our ability to retain or increase our user base and user engagement may be adversely affected, we may not be able to maintain or grow our revenue as anticipated, and our financial results could be adversely affected.”That’s the reality of it. One problem for Facebook is China’s state authorities, which grant spartan online operating licenses to overseas players, especially powerhouses like Facebook. Another is the increasingly powerful indigenous players to which the market has been left. Social network growth has exploded, but most of the operators are native incumbent portals, with eye-popping user counts. Succeeding social networks, the rise of weibos (Twitter-esque microblog services) has gained mindshare for allowing quick dissemination of information in the country notorious for restricting information flow.But the Chinese market is also in flux. Local services complied with new regulations compelling them to remove apparently false and controversial information, and to force users to use their real names.Will Facebook controversially kowtow to measures Silicon Valley and Wall Street might find reprehensible? If so, it could be the easiest move it would make in China – the country has been the rocks on which many a western company has floundered. But consenting to Chinese restrictions on online free speech would be utterly at odds with Zuckerberg’s open ethos – so let’s continue to consider China off-limits.
2. Russia
21.2% of online population (comScore, March 2012). Growth prospects: Very good — Already gained good toe-hold.
#1	VK.com	Russia’s fourth-most-used website has around 120 million accounts, is popular (and controversial) for its integrated file-sharing – and bears striking resemblance to Facebook.
#2	Odnoklassniki	Russia’s Classmates site puts a Facebook shareholder in an awkward position – DST owns it.
#3	Facebook	Has grown fast since launching in Russia in early 2010.
Russians are the world’s most prolific social network users, according to comScore. Facebook has already grown fast there. The country puts the site in a strange position, since two competitors (Odnoklassniki and Mail.ru’s MyWorld) are backed by Facebook investor DST. Now that DST has exited through Facebook’s IPO, however, the stage is set for a clean fight. “The figures suggest that local social networks will not be able to hold onto their dominance much longer,” eMarketer said in February. “The real question may not be whether Facebook will overtake local social networks there, but when.” Market leader vKontakte’s popularity may decline if it complies with a court ruling that it breaches copyright by removing its file-sharing feature.
3. South Korea
27.2% of online population (comScore, March 2012). Growth prospects: Very good – Already hurting competition.
#1	Cyworld	Tried and failed to enter the U.S. and Europe but this isometric 3D chat world succeeds at selling virtual goods to users.
#2	Me2day	This local Korean microblog service, operated by the Naver portal, is popular with celebrities.
#3	Facebook	Its monthly users doubled to 12 million in 2011, Korea Herald reported.
In the country that has been enjoying high-speed fixed and mobile services for years, Cyworld has locked up mindshare since 1999. But Facebook is poised for big gains – last year, it robbed Cyworld of members, prompting the incumbent to invoke a corporate revamp to fight back, Korea Herald reported.
4. Japan
23.4% of online population (comScore, March 2012). Growth prospects: Moderate – Zuck must beat the Tweet.
#1	Twitter	Guess who? Japan’s top social network is Facebook’s Silicon Valley sparring partner, whose first non-English endeavour has paid dividends.
#2	Mixi	The site has gained a strong local mindshare by founding early, in 2000.
#3	Facebook	Japanese user base grew by 78 percent through 2011.
After Twitter overtook local network Mixi, Japan is a “Twitter nation”. There, successive global records have been broken for tweets-per-minute, despite Twitter being predominantly an English-language medium. So Facebook will have to fight its domestic competitor on foreign turf.
5. Vietnam
37.8% of online population (comScore, March 2012). Growth prospects: Uncertain – To block or not to block?
#1	ZingMe	A focus on games has given the native site the lead.
#2	Go.vn	This Facebook rival is some competitor – operated by state-owned Vietnam Media Corp.
#3	Facebook	Has apparently suffered from censorship after earlier growth.
Facebook has been blocked in Vietnam since 2009, but many citizens circumvent it with a few clicks, The Economist reports. The communist government’s on-off embrace of social networks comes against a backdrop requiring their compliance with censorship laws. Confusion reigns.

• Facebook gets a reality check on IPO day
• Facebook buys Karma app
• Infographic: A look back at Facebook’s revenue and valuations
• Facebook IPO: Tracking the price
• Facebook IPO: Here is the best of the web
• Why 900M isn’t the only number that matters to Facebook
• Place your orders: Facebook IPO shares set at $38
• How recent digital media IPOs have fared
• Why 900M isn’t the only number that matters to Facebook
• 10 startups that couldn’t have done it without Facebook
• Are Facebook Credits the key to the social network’s future?
• VCs simply love the Facebook Mafia
• Will Facebook adapt to mobile or will mobile adapt to Facebook?
• Facebook’s biggest problem is that it’s a media company
• Weigh in on Facebook’s future prospects
• Facebook brings bigger pics and posts to mobiles
• A preacher, 500 startups, and a dream to change it all
• Facebook’s delicate balance between profits and privacy
• Boy in the Hood(ie)
• Facebook sets price for biggest-ever US IPO
• Facebook’s monthly rent is $1M+, and other gems from S-1 update
• Facebook just revealed its Kryptonite: mobile
• Facebook has nothing to fear, except itself
• It’s here: Facebook files for $5 billion IPO

Much more in our Facebook IPO archives.

Photo courtesy of SeanPavonePhoto / Shutterstock.

Facebook will debut on the NASDAQ on Friday, as expected, under the ticker symbol FB. According to the company, it will offer 421,233,615 shares – which breaks down to 180 million new shares and 241,233,615 shares from existing stockholders, i.e. Zuckerberg and company. That would raise the company and its investors a cool $16 billion.

In addition, Facebook’s current owners have also agreed to relinquish another 63,185,042 in the next 30 days if its underwriters see fit, and given the enormous demand and escalating IPO share target they probably will.

The IPO will value Facebook at an astonishing $104 billion. To put that in context check GigaOM’s look at the other big digital media IPOs of the last year – which no longer look so big by comparison. For the rest of our Facebook coverage during IPO week, check out our special pull-down section on the GigaOM homepage.

Stock market debut: 5/24/2011
Deal size: $1.3 billion
Valuation: $8.4 billion
Number of shares offered: 52.2 million
Set price/share: $25
Opening price/share: $35
* Most-recent opening price: $21.93

YNDX data by YCharts

Stock market debut: 12/16/2011
Deal size: $1 billion
Valuation: $7 billion
Number of shares offered: 100 million
Set price/share: $10
Opening price/share: $11
Most-recent opening price: $8.49

ZNGA data by YCharts

Stock market debut: 5/4/2011
Deal size: $743 million
Valuation: $4 billion
Number of shares offered: 53.1 million
Set price/share: $14
Opening price/share: $18
Most-recent opening price: $6.39

RENN data by YCharts

Stock market debut: 11/4/2011
Deal size: $700 million
Valuation: $10.5 billion
Number of shares offered: 35 million
Set price/share: $20
Opening price/share: $28
Most-recent opening price: $12.66

GRPN data by YCharts

Stock market debut: 3/2/2012
Deal size: $107.3 million
Valuation: $1.47 valuation
Number of shares offered: 7.15 million
Set price/share: $15
Opening price/share: $22
Most-recent opening price: $21.63

YELP data by YCharts

Stock market debut: 5/19/2011
Deal size: $353 million
Valuation: $4 billion
Number of shares offered: 7.8 million
Set price/share: $45
Opening price/share: $83
Most-recent opening price: $112

LNKD data by YCharts

Stock market debut: 6/15/2011
Deal size: $235 million
Valuation: $2.6 billion
Number of shares offered: 161 million
Set price/share: $16
Opening price/share: $20
Most-recent opening price: $11.50

P data by YCharts

Stock market debut: 1/26/2011
Deal size: $151.3 million
Valuation: $1.5 billion
Number of shares offered: 8.9 million
Set price/share: $17
Opening price/share: $23.50
Most-recent opening price: $9.06

DMD data by YCharts

Stock market debut: 2/17/2012
Deal size: $55 million
Valuation: $290 million
Number of shares offered: 5 million
Set price/share: $11
Opening price/share: $14.30
Most-recent opening price: $14.98

BCOV data by YCharts

Stock market debut: 5/11/2011
Deal size: $50 million
Valuation: $263 million
Number of shares offered: 5 million
Set price/share: $10
Opening price/share: $10
Most-recent opening price: $1.15

FFN data by YCharts

* All most-recent opening prices are from May 17, 2012.

If Facebook’s future is mobile, it may not be enough for it to merely secure a piece of the mobile ad market: It might need to make the mobile ad industry figure out how to work with Facebook.

Berg Insight calculated that global spending on mobile advertising was $3.4 billion in 2010. And while it’s growing at rate of 37 percent per year, Facebook’s total revenues in 2011 were $3.7 billion, of which $3.1 billion came from ads. Meanwhile more than half of its 845 million monthly active users accessed the social network through mobile apps or its mobile website, both of which sport no ads.

Of course, most customers are using both platforms, not one or the other, so Facebook doesn’t need to build a $3 billion mobile ad business overnight. But even if Facebook were to replicate a fraction of its Web-based ad business on mobile, it would account for a large portion of the money currently being spent on mobile ads.

Mobile hasn’t been unkind to Facebook

Facebook isn’t losing money on mobile today. Far from it. EMarketer principal analyst Noah Elkin pointed out that 90 percent of Facebook’s customers are crossing between platforms, meaning they’re generating ad revenue in one way or another. They may not see any ads when they’re accessing the network from their phones, but they’re certainly seeing them when they log in from their Web browsers. One of the reasons those customers remain active and loyal to Facebook is because they have the flexibility to network socially from anywhere, so you could argue that mobile drives more ad views, not less.

It’s the remaining 10 percent, or 83 million users, that Facebook is worried about, Elkin said. Facebook doesn’t make a dime in ad sales off them, and while they may be a small segment of Facebook’s customers now, they’re its fastest-growing segment, as they are coming from the developing markets where Facebook’s future growth lies.

“The big concern is the mobile-only audience is growing faster than the multi-channel or desktop only audience,” Elkin said. “The long-term concern is that the mobile-only audience will come to dominate the social network.”

Enter the sponsored story

Facebook’s answer isn’t the display or search advertising responsible for the lion’s share of the mobile ad market today but the sponsored story, which it only recently introduced on the desktop interface and now plans to migrate to mobile. The format is so nascent that it’s not even really factoring into eMarketer’s current ad spend figures for traditional online spending, to say nothing of mobile.

Elkin said the format is promising not only because Facebook can use it to tailor ad content specifically to its users’ interests — which it knows a lot about — but also because it could factor in location and presence data unique to mobile. That means more value for advertisers and more revenue per ad. Ultimately that could overcome the limitations of mobile, where a small screen gets cluttered pretty easily. But it’s also an untried advertising format, and as my colleague Mathew Ingram points out, not even Facebook is convinced sponsored stories will work.

“If Facebook is successful, one of the impacts will be that it will grow mobile advertising overall,” Elkin said. Google, Apple and Millennial Marketing wouldn’t stop growing in the mobile ad space, but Facebook’s mobile ad revenue would be additive. In fact, one of the reasons eMarketer is projecting such huge growth in U.S. mobile advertising — jumping from $1.45 billion in 2011 to $10.8 billion in 2016 — is because it projects Facebook will precipitate a surge in new ads starting in 2014. If Facebook flops, then eMarketer will have to revisit its growth numbers, Elkin said.

Don’t piss off your future customers

Facebook faces some daunting tasks. It can’t just build a mobile ad business. It has to build the mother of all mobile ad businesses. And it has to do so with an ad format that’s still unproven.

Ultimately, its entrenched customers will cut Facebook some slack. They might gripe about ads crowding the limited real estate of their phones, but they’re not likely to abandon Facebook, considering how much of their online lives are embodied in the social network. But then again, those aren’t the customers Facebook is losing money on.

It’s the mobile-only users just discovering Facebook in India and other far-flung countries across the globe that the company needs to please. For many of them their first and only experiences with Facebook will be through mobile phones. If that experience isn’t engaging (and as my colleague Kevin Tofel writes, the Facebook mobile app experience is often subpar) then customers may abandon the social network entirely.

There’s been a lot of attention paid to Facebook’s business model recently, especially with the news that General Motors has killed a $10-million advertising campaign devoted to the giant social network — not exactly a great sign of confidence in advance of the world’s most eagerly anticipated IPO. And GM’s move is only the latest indication of discontent, as other advertisers are also questioning their spending. What all of these moves reinforce is that while Facebook may look like and function like a social network for the majority of its users, on the business side it looks almost exactly like a traditional media company, and that is both good and bad.

Like Twitter, the content within Facebook may be generated entirely by users, but the business model is all about advertising, just like any other media entity. According to the social network’s latest S-1 securities filing, advertising accounted for more than 80 percent of its $1-billion in revenue in the most recent quarter. And while some of that represents experiments with “social advertising” such as Sponsored Stories and other features, much of it is essentially run-of-the-mill banner and display advertising — not all that different from what you would find on a newspaper or magazine website, or any blog network.

In some ways, Facebook ads are actually worse than regular ads

That helps explain why Facebook’s advertising isn’t exactly setting the ad world on fire: in fact, according to at least one study, clickthrough rates for ads on the social network are actually lower than the already abysmal clickthrough rates for regular Web advertising (for what it’s worth, Ford says that it is more than happy with its spending on Facebook, unlike General Motors).

Facebook actually has an even bigger mountain to climb than newspapers or other media entities do when it comes to advertising, since the social nature of the network could actually interfere with the effectiveness of traditional ads. Sir Martin Sorrell, chairman of WPP Group, has said that he isn’t even sure advertising can work within an environment like Facebook, which is inherently about social connections and conversation. As angel investor and blogger Chris Dixon notes, ads on Facebook are like putting billboards in a park:

When people use Facebook, they are generally socializing with friends. You can put billboards all over a park, and maybe sometimes you’ll happen to convert people from non-purchasing to purchasing intents. But you end up with a cluttered park, and not very effective advertising.

As Dixon points out, what made advertising such a spectacular business for Google was that people who are searching for things are already part-way down the road toward wanting to buy something — in other words, they are further along the spectrum of “purchasing intent.” And at least the readers of newspaper websites and other media entities are theoretically interested in information about the world, current affairs, even entertainment. Many Facebook users are simply there to socialize, share photos, etc. How does that translate into a receptive environment for advertising?

Facebook needs to start diversifying its revenue sources

Facebook is also hamstrung to some extent when it comes to the options that other media companies are experimenting with, such as subscriptions or paywalls. Not only has Mark Zuckerberg promised repeatedly that Facebook would always remain free, but it’s not clear that users would pay anyway — although the network is reportedly experimenting with a new feature that would allow users to promote their posts.

Those are the downsides of Facebook as a media company. But despite incidents like the GM announcement, investors are likely to focus more on the upside, and there is arguably plenty of it: for one thing, Facebook has close to a billion active users, and even in an age where advertisers want to target specific segments or groups as much as possible, scale still matters — particularly for major brands. So a lot of advertisers are probably going to stick with Facebook simply because it is one of the biggest games in town.

Not only that, but as Jon Steinberg of BuzzFeed pointed out on Twitter, what other option do advertisers have — to go back to video pre-rolls and banner ads? If the future of advertising is social, then hitching your wagon to the largest social player in the world is probably a better bet than trying to figure it all out on your own. And there is at least the potential for Facebook to disrupt the ad market in some interesting ways, such as an “open graph”-powered ad network that could extend its reach throughout all the millions of sites that use Facebook’s platform.

As Dixon notes, Facebook also has a number of other emerging business models, such as an e-commerce platform driven by Facebook Credits. These are embryonic at best, however, and so for the moment Facebook is still overwhelmingly reliant on advertising — and as every other media company is painfully aware, that sword cuts both ways.

Post and thumbnail images courtesy of Flickr user Olaf Gradin