Why Facebook Is Worth Over $10 Billion

Posted by admin in Facebook on March 8, 2010

Yahoo! have been in talks with Facebook for over a year now and apparently recently got shy at Facebook’s $1 billion asking price but as I will explain here Yahoo! have missed out on an absolute bargain.

Facebook have 18 million users, plenty. However MySpace has 100 million + and sold for a mere $580 million to News Corp’s in 2005. YouTube sold to Google for a reported $1.65 billion in 2006 but it serves over 100 million video’s a day and has over 25 million visitors a month. So what makes Facebook so valuable? It gets relatively huge traffic levels but not on par with YouTube or MySpace. Despite now being available to anyone it began life as an exclusive network for students (you needed an educational email to register) and this is still its primary user group.

So where’s the money?

Currently Facebook displays conventional banner advertising on users’ homepages and selected pages through the site. Adverts are unobtrusive and random in so much as they’re not targeted at any particular user- they’re just served to the entire site on a random basis. Facebook are doing ok out of this arrangement on the basis of the number of page impressions they receive, although in reality they’re keeping advertising at a minimum in order to build up the value of the site for its eventual sale which will almost certainly happen in 2007/8. Smart guys!

The power of information

Register with Facebook and quickly you can find yourself giving away huge volumes of valuable personal information. Think about it… Facebook know your name, they know how old you are (actually your D.O.B which is infinitely more valuable as I’ll go on to explain), they know if you’re male or female, they know your hometown, your postcode if you choose to give it away (although I doubt many users choose this), they know if you’re single, in a relationship (and who with), married, divorced etc, they know your sexual orientation. Ok so you can answer all these questions as honestly, dishonestly or vaguely as you like but from what I’ve seen people happily give accurate information about themselves as it’s their friends and potential friends who are going to see it- and no one else right?

But what else do Facebook know? Well they know where you went to school, where you work, more sinisterly your religious and political views. From this we can start to build up a pretty valuable market profile. As I’m telling Facebook I may as well tell you I’m Male, 22 (born in August), Straight, in a relationship, conservative, atheist from Brighton, England. Went to school at Blatchington Mill Secondary, college at a place called BHASVIC, University at Bournemouth. From this information we can draw further assumptions- I live in Brighton and based on the location of my schools catchment area we could pretty accurately map places in Brighton I know about, visit, and live in (think Google maps API). I’m a straight; conservative from a reasonably wealthy area in full time employment therefore I’m probably white, middle class with a decent disposable income.

So what else? Facebook know what you look like, they probably know what you used to look like a few years ago as well. Probably most significantly they know who your friends are, they know how you know them, they know when you talk to them, what they look like and ultimately they know exactly the same information about them as they know about you- you’re interests, likes and dislikes and your friends tastes as well.

They know your email address, so they know if you use Hotmail, Yahoo! Mail etc. They know your phone number so they could pretty easily work out your phone provider. They have your IP address so they could work out your ISP. They know where you’ve arrived at the site from so they know what search engine you use (enter Yahoo! And Google to the bidding war), what browser you’re on, they know if you’re visually impaired or have learning disabilities from the settings on your browser.

Facebook know when I’m logging in and from where so they know the hours I work, if I’m using the internet at work, the pages I leave Facebook to go to or the pages I come from so they know what other sites I look at. I can set my current status and tell Facebook exactly what I’m doing or feeling right this second.

Ok so you get the picture by now, one last thing though, is your Facebook password the same as your email account password, your internet and telephone banking password, every other password you use in your daily life (because until I wrote this post mine was!) how much more information do you want to give away?

What’s the risk here?

Realistically it’s pretty slim. Facebook are a nice bunch of guys and a great site, I love using it and despite knowing what I know about information security and the like I choose to give away a big chunk of the information I’ve talked about here.

Yahoo! And Facebook

So if Yahoo!, Google or god forbid Microsoft successfully purchase Facebook (as I say I’m reasonably confident this will happen this year) the Orwellian lucid dream proposed by this post becomes a perpetual nightmare. Imagine a company who have made billions and dominated the fastest growing market in the world by developing algorithms which crawl hundreds of millions of pages of random information (the internet) and categorize that information with the ultimate goal of matching it to businesses and selling advertising.

The search algorithm let loose on Facebook

Imagine the search engines let loose on Facebook. An algorithm tuned to pick out profile information (John, born 13.08.84). Map it to keywords in personal interests i.e. football, Manchester United. Plot your location on a map i.e. Brighton, England. Follow links to your closest friends with similar interests i.e. Bob and Dave who live round the corner and serve me an advert something like:

Happy birthday for next week John.

Did you know its Dave’s birthday the week after?

Why not book tickets for Brighton and Hove Albion vs. Manchester united on 12.08.07

Click here to book now and get 3 tickets for the price of 2 (why not ask bob to come along- he supports Brighton and you haven’t spoken in a while).

Book today and we’ll give you a half price limo from your house to the game with trashy-limo’s.com.

Now that’s powerful advertising and it’s just around the corner. If Facebook has 25 million registered users by the time it’s sold, half of whom visit every day that’s a minimum 12.5 million page impressions a day. Serve the advert above at $1 a click (which is far less than its worth based on the current AdWords CPC model) expect a click through rate of up to 10% based on the precise nature of the advertising and that’s $1.2 million minimum a day- almost $½ a billion a year. Grow that user group to 50 million (realistic if Google or Yahoo! can tap into their existing user database) and sell ad space on an affiliate basis say the football tickets at $300 with a 10% affiliate kickback and a 10% conversion rate =$3 per user x 25 million users =$75 million a day or $2737500000 in year 1! OK lets not get carried away people aren’t going to spend $300 every other day but the logics there and so the cash.

Will the audience except it?

Better quality advertising means less advertising- less websites rammed with banners so you can’t find what you’re looking for, less popups, less low quality products. This is the main driving force behind the success of search marketing programs and profile based advertising is already in place with Google’s personalized search returning more targeted AdWords ads than previously possible. If it falls into the hands of Microsoft then people may be more wary but with the image of Google or Yahoo! and Facebook profile information is seen as soft information as the company doesn’t sell you products directly and he service is free. It’s the way the internet is going and I believe it’s where we’ll be in 5 years.

Identity theft

The point I’ve been making tediously through this post is that we should be more careful about what information we give up and to whom. If the internet was a county it would be Nazi Germany and Facebook would be the Gestapo! Social utilities like Facebook are afforded the sort of privileged information fascist governments the world over would and have killed for. We moan about identity cards being introduced in the UK (ironically there’s several Facebook groups dedicated to the cause) but we happily give up personal details to a bunch of college geeks in the states who are ultimately planning on selling our details to the highest bidder (the value of any site is based on the volume, quality and amount of information they have about their traffic- but best of luck to them) possibly to the company who already control the majority of world business systems through the windows platform.

This post is not meant to scare- it’s simply a recognition of the power of new internet technologies, their possibly applications and to pose the question- if your Facebook friends are your real friends shouldn’t they know your birthday? Are Facebook really going to buy you a present?!

The Church of Facebook: How the Hyperconnected Are Redefining Community

Posted by admin in Facebook on March 7, 2010

• ISBN13: 9781434765345
• Condition: NEW
• Notes: Brand New from Publisher. No Remainder Mark.

Product Description
A revolution is taking place, one profile at a time. Online social networks are connecting people like never before. And with millions of users, they’re creating a virtual world that erases all boundaries. It’s a movement that’s changing how we form relationships, perceive others, and shape our identity. Yet at their core, these sites reflect our need for community. Our need for intimacy, connection, and a place to simply belong. Are we seeing the future of … More >>

The Church of Facebook: How the Hyperconnected Are Redefining Community

The Truth About Facebook

Posted by admin in Facebook on March 3, 2010

There are lots of social networking websites that you can participate in today like MySpace and Bebo, and they all have their pluses and minuses. The best way to choose a community to participate in is to evaluate the people who have already joined. To me, Facebook is certainly one of the best internet meeting places for networking, both socially and professionally. I also use Linked In and Myspace. Of all the social networks, Facebook is the best place when it comes to all around marketing and networking.

I have been using Facebook for the past two years, and it is a first-class tool for marketing to add to your marketing arsenal. Here are 10 tips to use on Facebook to introduce new people to your business for FREE!

1. Make an Attractive Profile: This is absolutely the FIRST thing that you must do to get noticed on Facebook . Think of your Facebook profile as part of your branding. A powerful profile will include a professional picture of you. Don’t use the one of you dressed as Santa Claus, unless that’s what your selling. Make sure your new Facebook profile is complete. Your profile should include your contact information, your website address (this is really important), education, work experience and your personal interests. A complete profile is the only way to go.

2. Add Friends: This is what sets Facebook apart – the ability meet new people, build relationships and sustain them. The more relationships you develop, the more satisfying your marketing efforts will be. You can use Facebook’s own tools to search for friends that already belong to Facebook. Once you add your friends, you can search for kindred spirits. Make their acquaintance, become their friend, build a relationship. One great thing on Facebook is that you can see friends of your friends. This will help you build a extensive network in no time.

3. Join Facebook Groups: You can join groups within Facebook that are similar to what you do. There are groups for consultants, councilors, and instructors. Almost every conceivable type of professional service provider has some kind of group on Facebook. I belong to several Facebook groups and have made hundreds of new contacts this way.

4. Create your Own Group: Can’t find a group that really fits your style? Create your own! You can add members, publish articles, begin some great discussions, and probably start quite a few important new relationships. And even if you find great group to belong to, start your own. This gives you the platform to be the trendsetter!

5. Syndicate your Blog Using RSS: You can syndicate your own blog on your Facebook profile page. This in essence means that every time you make a post, it will automatically show up on your profile page. More Exposure leads to More Readers leads to More Leads creates More Business. And the bonus is the back links to your site. I syndicate headlines from my 3 blogs on Facebook.

6. Comment on Other Peoples Profiles: Are you a follower or devotee of someone’s work? Reach out to them on Facebook! Many of my friends check their Facebook messages more constantly than their email. They are also more likely to respond to Facebook messages. Don’t feel quite right sending out a message to someone you don’t know? Don’t worry! Leave them a “just saying hi!” or “I love your work!” message on their wall. All profiles come with “virtual walls” where business associates can leave a comment. The more comments you leave on your friend’s profiles the more exposure you get!

7. List your Events: Speaking somewhere or Hosting a Teleseminar? Add an events page and invite everyone you know. You can even see who RSVPed and get feedback from your attendees. Marketing doesn’t get any simpler (or more inexpensive!) than this.

8. Send Virtual Gifts: Want to show your appreciation for someone? Send them a virtual gift. You can choose from a teddy bear to an egg that hatches a surprise gift over 4 days (plus tons of others). With all the Facebook applications for gift giving available, what are you waiting for. This is a clever way to build and nurture new relationships!

9. Use Some Cool Apps: Facebook has literally dozens of applications that were built just for the site. Quizzes, games, challenges and more. When you use an application, you get to invite your friends to use these cool mini applications (Apps). So just like number 8 above, this allows you another way to stay connected to your friends on Facebook. Again, this helps you maintain and nurture new relationships.

10. Create a Community: Perhaps Facebook’s greatest benefit is that it allows you to build a community. It provides you a group of people who are perpetually connected to you, and these friends are open to hearing what you have to say. Write on people’s walls, have conversation, and introduce them to each other. Start building your brand and leveraging Facebook for business building!

Facebook is a fantastic place to introduce yourself to lots of new people who may also become customers and/or clients. Just keep one thing in mind: don’t get too carried away and spend all your time there. Facebook is a tool, part of your online marketing plan. Use the tips above, use them wisely and have a little fun at the same time.