A very interesting techcrunch article touches many of the questions I've raised here at atma. It debunks how Facebook will make gobs of money - a question I pondered in my new favorite business model post. It's very interesting - they hypothesize that it will primarily come out of the $60B advertisers spend on TV and not at the expense of google (another topic I discussed in my groupon post). They think brand advertisers will flock by the thousands since there is no good way to target demographic-based audiences online (text search by google is an agnostic algorithm at this point). Some good points they raise; I'm not sure if they are drinking the cool-aid after the new FB movie, or if in fact, the seismological shift from traditional media will happen as rapidly as they predict.
I think they are being a bit optimistic. Google basically came out of nowhere and swallowed billions of ad dollars. The market was not ready for search, particularly the quality of Google's engine. Do you think NBC doesn't know about Facebook? FB has been amassing over a half billion users over the years with more buzz than a reggae cafe. Don't get me wrong, I think they can win. There will be a lot more competition in its way which is why i think the shift will be far more gradual than the article predicts. I also don't think it will be the end of groupon or paypal the way they anticipate. Either way - FB just might be able to outmonetize its hype. And get an academy award while they are at it....
Sorry, but I don't see Facebook lasting. It is, I think, a very much an "of the moment" fad. It sucks up a bunch of people's time and effort, while yielding back very little in return. I see it starting to fall out of style right about when it goes public, then basically falling off the face of the earth, similar to MySpace.
ReplyDeleteHaving worked with various start ups and other online to drive traffic, Facebook only works initially as a first mover or one needs gobs of money to be actively placed in a reasonable place. Asking my friends at the former Double Click group that Google had to spin out due to anti-trust(not all of DoubleClick could be kept by that empire), advertisers are not seeing true results in social marketing. Hence, country by country it is a fad or until there is too much volume. There is too much competition in SEO optimization and marketing unfortunately needs to be creative beyond just ads online and 3rd party deals. As far as FB is concerned, people will spend on ads, and hence it becomes a search oriented model. Maybe they will become like Linked In in that there will be premia versions or other restrictions. I do not subscribe to a business model entirely based on ads. It drives ancillary revenue. If you take the FB model from what it offers, it technically would not earn any money on its core business. Will they charge for storage like all the online photo companies (for which I lost a lot of pictures) because I was unaware of their policies changes? Can you drive enough revenues to cover the cost of 500 million users?
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