Quote:
Originally Posted by AdmiralAkbar
My prediction is that once there is an IPO or a corperate buyout for big $$$, the pressure is going to come down really hard to instantly drum up ad revenue. And then the ads are going to start. And as they do that, users will turn away for the next Facebook; some startup that has a new idea and a fresh and useful look. And I'm no ad exec, but a quick check of a few Facebook pages show exactly zero ads that are trying to get "branding" of anything. They are mostly text based: "Click Here to get $100 Hotels in NYC!" side bar ads, "Meet Local Singles" pictures with no company name on them, etc. These are not indirect advertizing methods, but rather ads that are trying to get you to click on them and visit their site.
And here is where people will get stuck up: Google makes massive loads of cash with ad revenue, so why won't Facebook have a similar patern of success? This won't happen because Google is a "portal" (the whole point of going there is to find a path to somewhere else), while Facebook is an "end-point" (you usually don't go to Facebook looking for another site). As far as hosting goes, the cost of a few users is practically zero. But when you are in the business of volume (as you need to be to get profit from ads alone) this number can climb quickly.
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Google doesn't make the lion's share of it's ad revenue from google.com and the ads it places there. It makes its money from ad-words and the google-ads that people place on their own sites. Which, once again, is mostly based on impressions.
But yes, the game changes once the company is public. Right now--the profit motive is personal--they can expand as much as they want to make $$. But once there are shareholders, then the profit motive changes.