Quote:
Originally Posted by AdmiralAkbar
Actually, I disagree... to a point. You are right in that you can make money off of ad revenue. But in order to do actually make a significant ammount (enough to justify company worth of $1billion for example), you have to get a MASSIVE ammount of hits on your site, as well as a fairly large number of people that will actually click on the ads. Facebook as it exists today is more popular with many people because of its clean interface; that is to say, its interface that is free of massive banner ads, annoying sound/video ads and popups. For a quick test, go to MySpace and Facebook | Welcome to Facebook! and observe the differences in this respect. Facebook is stuck, in that if it changes its interface to include a large number of ads, it could turn off the very users it needs to survive. Also, do you know how much a company like Facebook gets for an unclicked banner ad on its site? Statistically zero.
Also, as Facebook has evolved to include more pictures and video, their infrastructure costs are increasing. I don't suppose you know anything about enterprise level hosting/data centers... it's not cheap. |
I see where you're coming from--and I agree that Facebook is overvaluated according to the numbers thrown around here. But I think you made my point in that in terms of advertising on facebook, less is more. Myspace is a cluster****** of crap. Facebook is clean--there's rich content and very little noise. So in which interface is advertising going to grab more attention---especially if they're using data-mining to target the ads.
And it's irrelevant whether people click-thru internet advertising--that's a secondary objective. The first is the impression--putting the image, the message, the brand recognition and identity in the mind. I don't know Facebook's impression rates, but I'd assume they're pretty good--which translates into value for the advertisers. Hell--what's the ROI on a $2.5M super bowl commercial? Does Bud Light recoup the tens of millions they spend on producing ads and buying media as a direct result of the ad? No--it's indirect. The ROI doesn't come from sales, it comes from the branding.
Yes--enterprise server systems are expensive. But I still maintain that the marginal cost of another user--the price of adding storage and computing capacity--is negligible, since each additional user adds more value for advertisers as described above.