Facebook's Spying on you

[SpartanGreen78]

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.

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.

[hexydes]

Originally Posted by AdmiralAkbar

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.

This is the bottom line, and why it is just that "reporters" in the tech industry are saying Facebook will supplant Google. Google will make money because they have two ways of generating it from ads, both of them sustainable for the long-haul:

1. When users actively search out information (via Google's search technology), they also receive RELEVANT ads to what they were ACTIVELY looking for. It is basically additional search results. Compare this to Facebook, who has no way of knowing what you are interested in, other than either by the group you belong to (barely accurate), or by data mining (good luck putting a friendly spin on that one, as we've seen from this thread).

2. Google delivers 3rd-party ads to the end-result sites. Someone puts Google's code into their page, Google delivers the ad. Google's revenue doesn't depend on that one site being successful, because if it isn't, 100 others will pop up and take its place. Facebook on the other hand is one site. If ad revenue doesn't work out on their site, they're screwed. They have no other way of making money.

It's extremely obvious what Facebook is trying to do, and that is drum up as much hype as possible to try and overvalue themselves and make a huge cashgrab before completely selling the farm. I can't fault them, it's smart, and will probably work to some extent. I just can't believe there are still companies stupid enough to buy into this (especially with the .com bubble so fresh in everyone's mind).

[The Great Danton]

Originally Posted by Negotiator

Whoa whoa whoa, let's get some numbers straight. Facebook has not said they're worth a quarter trillion. Microsoft paid $240,000,000 for a 1.6% stake. At that rate, Microsoft is saying that 100% of facebook is $15,000,000,000. That said, I've soured a bit on the seemingly inevitable IPO. The darling of the tech world apparently had some bugs they weren't telling people about.

No kidding.

[AdmiralAkbar]

Originally Posted by SpartanGreen78

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.

The point is currently, Facebook utilizes a majority of 100% text ads, most of which do not even have the destination site in them. If I were to click on the "$100 a night hotels in NYC" link, I could be taken to hotels.com, priceline.com or anything else. They have achieved no branding at all by putting that ad there.

While you are right about the Google "ad-words" making a tidy profit, they also make a huge profit off the "Sponsored Links" at the top of your search. Go to Google and search for hotels, and check out the first 3 links (all of which are probably relavent to what you are looking for, and probably what you were looking for anyway). That one click on the "Sponsored" Expedia.com link just made 100-1000 times what a page view on Facebook did.

[hexydes]

Originally Posted by AdmiralAkbar

The point is currently, Facebook utilizes a majority of 100% text ads, most of which do not even have the destination site in them. If I were to click on the "$100 a night hotels in NYC" link, I could be taken to hotels.com, priceline.com or anything else. They have achieved no branding at all by putting that ad there.

While you are right about the Google "ad-words" making a tidy profit, they also make a huge profit off the "Sponsored Links" at the top of your search. Go to Google and search for hotels, and check out the first 3 links (all of which are probably relavent to what you are looking for, and probably what you were looking for anyway). That one click on the "Sponsored" Expedia.com link just made 100-1000 times what a page view on Facebook did.

Correct. I think the bottom line is that Google has a means of making money off of ad-content that can survive changes in the market (via making money off of other 3rd-parties when the current ones aren't profitable anymore), whereas Facebook has basically one revenue stream (embedded ads), and if that dries up, then they are basically a free service that is not generating any income.

[Brock F@%ing Samson]

VentureBeat » Facebook buying Plaxo?

I think they'll have no problem generating revenue...look at the eyeballs they'll be getting now.