"I think Facebook's in for a rough ride…" — Andy

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My good pal and business partner Andy believes that Zuckerberg and his pals will have “a tough row to hoe” when it comes to monetizing the FB platform. Facebook’s valuation right now is at about $15 billion. This is all based on the notion that there’s some way to make an awful lot of money off the system.

But, like Andy said, it won’t be easy. Read/WriteWeb agrees:

There is a myth floating around that contextual advertising is going to help Facebook justify its $15 billion valuation. The myth goes something like this: because Facebook knows everything about us, it will always be able to serve perfect ads. However, the reality is more like the following:

  • Facebook does not know much about us
  • The data that Facebook has is not structured
  • People are not coming to Facebook to click ads

Like the author says, monetizing the beast isn’t impossible, and there’s certainly a team of bright folks running the FB show. The next few years will be very interesting on the social networking tip.

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4 Responses to “"I think Facebook's in for a rough ride…" — Andy”

  1. Fish
    December 9, 2007 at 12:35 pm #

    Was it you who suggested that Facebook will take the lead of MySpace and other social networking sites whose popularity seems to ebb and flow, flavour of the month style?

  2. Adam
    December 9, 2007 at 12:46 pm #

    It wasn’t who invented that theory. Cory Doctorow of Boing Boing fame actually asserts that Facebook will start bleeding, and eventually not be useful anymore as users jump ship. Whether that’s true or not remains to be seen.

  3. andy
    December 9, 2007 at 9:12 pm #

    Funnily enough, I agree with the conclusion even though I think his homework is wrong.

    Facebook knows tons about “us” insofar as what people tell their friends (via Facebook) is probably more accurate than anything they’d tell a marketer/surveyor under coercion (be it monetary or otherwise). The structure of the data is there, too – Fav. TV, Fav. Books, etc all exist – Alex seems to just be out to lunch on that one.

    The last part is absolutely spot-on, though. No one, anywhere, is going to Facebook to check out that awesome Zwinky ad or the one with the emoticons that yell at you when you accidentally mouse over them.

    Zuck is keenly aware that with all the attention and hype surrounding FB, he must deliver something of real, tangible value to people with money – advertisers – before the tide turns and people find the next cool place to hang out. FB burnout seems to be increasing, though sadly I don’t have any statistics other than Adam and myself at the moment ;-). Beacon absolutely exploded everywhere, so mark that down as strike 1.

    I’m far more interested in seeing how they regroup and whether they can come back with something really, truly great… or if the Beacon incident was just the first of many threads to unravel.

  4. Adam
    December 11, 2007 at 4:10 pm #

    Yeah, but Andy, how many people actually fill in those details? I suppose it doesn’t matter. Even if half of the users of Facebook fill in those details, that’s still 20 million supposedly-net-savvy people you can target…