Shel Israel argues that Facebook’s revenue ideas have gone from awful to worse. He has compared Facebook to “an old college romance. It was torrid at first and I thought it was true love. But then there came a series of unpleasant surprises in her behavior. One morning I woke up and discovered she who had been so lovely so recently had become downright ugly to me.” While I’m not sure about Shel’s analogy I have begun to wonder how Facebook is going to grow their revenue.
Currently, Facebook’s model appears to be perfect the “social graph” first and build a revenue stream later. Facebook is estimated to be bringing in $150 million in revenue and is sitting on a significant amount of cash. I have to wonder if Facebook’s future revenue models will be successful or if they will fail horribly. While people have utilized Facebook polls and have tested out Facebook SocialAds, their advertising system has not gone mainstream. So what will be Facebook’s primary revenue source?
It appears that SocialAds is Facebook’s primary monetization tool. While people have complained of Facebook’s horrendous click-thru rate, those clicks are by highly targeted individuals. One person that I spoke with at the Web Community Forum in Seattle said that they were having great success. While the click-thru rates were extremely low, their conversion rate was extremely high (above 60 percent). If that’s the case, SocialAds may be a success.
Conversely, Facebook’s attempt to derive revenue from their new Pages offering is a poor one. As a business, why would I opt to rely completely on SocialAds and newsfeed items to drive users to my brand’s page? What happened to user invites that the free groups already offer? I definitely think Facebook should rethink their Pages offering. Unfortunately, I don’t have statistics as to the performance of Pages but I would assume that the Facebook Pages have not been as widely adopted as Facebook Groups. Am I off base here?
Can Facebook generate billions of dollars in revenue? Perhaps. At this point any equation that I provide which justifies $1 billion a year in revenue would be totally inaccurate as it is limited to speculation. While I think that Facebook’s revenue model will be successful at generating a significant amount of revenue for the company, I’m doubtful that it will live up to the hype generated by Facebook’s $15 billion valuation. What do you think?
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I dont think Facebook's Pages are only focused on business, it's also a way to connect Facebook with the whole world, including people and thousands of things.
Comment by Yuancheng — December 18, 2007 @ 6:16 pm
I dont think Facebook's Pages are only focused on business, it's also a way to connect Facebook with the whole world, including people and thousands of things.
Comment by Yuancheng — December 18, 2007 @ 7:16 pm
facebook pages are fee!! there is no clear attempt to make money out of them as they are free…
Comment by fabuzz — December 19, 2007 @ 5:33 am
facebook pages are fee!! there is no clear attempt to make money out of them as they are free…
Comment by fabuzz — December 19, 2007 @ 9:33 am
Speaking from a user's perspective, Facebook actually seems to do a great job with ads. Of all the sites I visit, FB's ads are the only ones I consider clicking (and sometimes have done so). Perhaps they're getting keener with their targeting.
Comment by Mary Specht — December 20, 2007 @ 9:28 am
Speaking from a user's perspective, Facebook actually seems to do a great job with ads. Of all the sites I visit, FB's ads are the only ones I consider clicking (and sometimes have done so). Perhaps they're getting keener with their targeting.
Comment by Mary Specht — December 20, 2007 @ 10:28 am
Facebook Pages are still quite new and finding their feet.They are not a monetisation methodology for Facebook in themselves. Naturally they help build traffic and Facebook then advertise on the surrounding canvas as usual.However there are some very important technical/political differences between pages and forums.People don't need to be Facebook members to see a Fan page.They also don't need to "join" anything to get the content.This also opens up Facebook searches for generic web search, such as "the Google".There is no limitation of 1200 members for list messaging as there is with the forums/groups.Politically, your personal profile and groups/forums are far more "personal" affairs for people you have a more "direct" relationship with.The Pages were set up for a more remote "fan" concept with the numbers of strangers to match. From a publishers point of view, Pages are still FAR from ideal and they need some very special handling.This is stuff we cover in the BFN on Facebook.And yes that starts as a fan page
http://www.facebook.com/profile.php?id=7266299571Peter.
Comment by Peter — December 30, 2007 @ 12:17 pm
Facebook Pages are still quite new and finding their feet.
They are not a monetisation methodology for Facebook in themselves. Naturally they help build traffic and Facebook then advertise on the surrounding canvas as usual.
However there are some very important technical/political differences between pages and forums.
People don't need to be Facebook members to see a Fan page.
They also don't need to "join" anything to get the content.
This also opens up Facebook searches for generic web search, such as "the Google".
There is no limitation of 1200 members for list messaging as there is with the forums/groups.
Politically, your personal profile and groups/forums are far more "personal" affairs for people you have a more "direct" relationship with.
The Pages were set up for a more remote "fan" concept with the numbers of strangers to match.
From a publishers point of view, Pages are still FAR from ideal and they need some very special handling.
This is stuff we cover in the BFN on Facebook.
And yes that starts as a fan page
http://www.facebook.com/profile.php?id=7266299571
Peter.
Comment by Peter — December 30, 2007 @ 1:17 pm
Clearly Shel Israel has been proven wrong, I hope people don't take his advice.
Comment by Critic — April 27, 2010 @ 9:35 pm