Those looking for Facebook to transform their monetization strategy overnight and exit with their highly anticipated IPO anytime soon better not hold their breath. Jessi Hempel highlights the challenges currently facing Facebook. There are some serious problems. The most significant is the “blasé attitude that media buyers have toward the company” according to Hempel. Hempel emphasizes that Facebook ads can sell for as little as 15 cents per thousand impressions (CPM). That’s because the rapidly growing user base has its attention elsewhere while navigating the site.
Monetization isn’t Facebook’s only challenge. Zuckerberg is facing more pressure as he separates himself from his college roommates and buddies who were once his closest allies in favor of a more experienced management team. While it shows maturity on Zuckerberg’s part it no doubt causes tension among colleagues, friends and the management. Perhaps reflection is one of the goals of Zuckerberg’s current trip to India and Israel. I wouldn’t be surprised to see continued changes when he returns from his short sabbatical.
There are some big challenges ahead especially considering that not even Myspace, Facebook’s largest competitor, has not yet figured out an effective way for generating substantial revenue. The company isn’t completely troubled though. Facebook continues to see record breaking growth internationally and is preparing to launch the Facebook Connect service which will help transform the social web. In other words the company is facing classic growing pains. It has reached a critical milestone and needs to push through to become the company that everyone believes it will be.
It is an exciting time for Facebook. It will be interesting to see how the company transforms over the coming year.
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Hey Nick,I think Facebook is being a bit coy with their AD platform intentionally. They have such rich data and the AD targeting potential is very impressive. I think they are probably looking to bring in MSN AdCenter or something like that and then take things up a notch. I know that we spend quite a bit on Ads on FB and they convert well so if they stepped up their game and built an AD server like Google AdWords – they would be raking in the cash.Monetizing FB will happen – will they be worth 15 Billion that is another matter. However they are worth a lot and as more and more advertising goes online they are in the right position to capitalize on that. Cheers – Eric
Comment by Eric Dewhirst — May 13, 2008 @ 5:27 am
Hey Nick,
I think Facebook is being a bit coy with their AD platform intentionally. They have such rich data and the AD targeting potential is very impressive. I think they are probably looking to bring in MSN AdCenter or something like that and then take things up a notch. I know that we spend quite a bit on Ads on FB and they convert well so if they stepped up their game and built an AD server like Google AdWords – they would be raking in the cash.
Monetizing FB will happen – will they be worth 15 Billion that is another matter. However they are worth a lot and as more and more advertising goes online they are in the right position to capitalize on that.
Cheers – Eric
Comment by Eric Dewhirst — May 13, 2008 @ 6:27 am