Did Google Adwords have advertising opportunities like this back when it first started getting traction? Is it still possible to get impressions on bids this cheap for very long tail keywords in Google?
Would love to hear some input from someone more experienced than I.
NO, it is not possible to a purchase a meaningful number of $0.01 clicks on AdWords today.
I can't view the blog post (HN effect?), but I can say that we used to routinely purchase consumer electronics keywords (ipods, razr) between 2003-2005 and pay between $0.08 and $0.12 per click. Those same keywords today fetch over $1.00 or more. (Well not RAZR, but you get what I mean.)
Whereas on Facebook, I have yet to see CPCs of higher than about $0.45.
So yes, Facebook has a land of low-CPC opportunity. The challenge, of course, is conversion. Google has a proven track record of turning AdWords clicks into conversions. Whereas your average Facebook user who clicks on an ad is less likely to convert. (A good portion of the clicks seem to be accidental, in fact, judging by how quickly users hit the back button.)
My personal feeling is that Facebook advertising will one day grow to rival that of search advertising, but due to this issue of conversion (and purchase intent), other very smart people disagree.
Depends how well you structure your Adwords campaigns and how fast your website is ... etc. Basically with a quality score of 10/10 keyword you can get 0.01 cpc
I think an interesting case here that will be affected here is how social circles were dealing that one stubborn Facebook holdout.
Before, there were two choices. Either move communication to email, or leave them out of the loop. Now the choice is easy, and it will all happen within Facebook.
"killer" is journalistic shorthand for "rival", they just want the conflict and the attendant pageviews, they don't care who wins or who is likely to win.
Or if there is even a winner. Sometimes people forget that companies compete with each other and we don't all use the same products from the same companies.
From what I read last year's revenue was ~$800M and this year is looking like $1.2B. I hit it right in the middle. Regardless, this is revenue and revenue gets you shit on Wall Street. No one knows what their profit is, but even if it's in the $250M range (which I think is about 5x high), it still has to increase ~10x to get into the territory that a $100B valuation would need.
They're also quickly running out of people with money to register, so I doubt we'll continue to see such huge growth. Not saying they won't make a great business out of it, but tantalizing would be hires with a $100B valuation seems pretty shady to me.
Sweet, so they only have to raise that 50x before it's not a ludicrous statement. All they need to do now is get 25 billion people with as much money as the current 500m do signed up and they are good to go.
No, you are assuming that Facebook have already reached their maximum revenue per user. Facebook's revenue potential is massive and is only going to go up.
Indeed. Advertising is the easy way to make money, but I see a lot more creative ways to sell their social graph.
One would be to sell it to credit-rating agencies and insurance companies. If all your friends have totaled their cars and defaulted on their loans, then you aren't going to get one either. The only problem with this is that it's extremely evil (because even non-users of Facebook can be fucked by this, thanks to the "steal all of your email addresses" import method), and that there aren't very many banks and insurance companies.
Another model I see is using the photo service and the photo graph to help the police solve cold cases. Match the artist's sketch to the Facebook photo database, find some matches, and talk to their friends. Also very scary and evil, but potentially profitable. "Won't someone please think of the children?"
Anyway, once Facebook feels like they have a fairly complete graph and don't need any more users, then the money making can really begin.
Yeah. Using the Facebook graph to price health insurance. Has your girlfriend slept with someone who slept with someone who slept with someone who has AIDS? That will be $100,000 per month kthx.
Depending on their profit margin, yes they do. Revenue is worthless. They aren't making much money now and will have to make tons to be worth $100B. They're not a huge number of people with money left to register, so it's up to making more with what they have now. We'll see I guess.
MySpace just blew it. AOL was a safe walled garden for people who didn't know what the internet was. As the internet outside AOL increased in value, people had less use for their walled garden.
The same thing could happen to facebook if the rest of the internet gets more inherently social.
s/Facebook Fan page/AOL Keyword/
s/Facebook email/AOL email/
s/Facebook Games/AOL Games/
I hesitated before writing that. The reason I thought startup was the appropriate term is because as a business, facebook is still judged by what they might become/achieve.
Facebook's doing well now, but it would not be shocking if fewer people used it in 5 years.
Why wouldn't it be shocking? They've shown that they can ship and see through to maturity several revolutionary products. Stop thinking in the abstract: if a company employs teams who can build stuff, ship it, and bring it to maturity, that's what they'll keep doing. The tech industry isn't exactly lacking in revolutionary ideas to implement.
But, the chances are probably lower than Facebook failing. The chances of Google failing are much lower than the chances of Facebook growing its revenues (or prospects) 5X.
Price (ie working for shares) is an estimation of probability. I'm not saying Facebook is worthless. It's worth a lot. The reason Facebook's valuation isn't $100b already is because the road from here to there is an uncertain one. The two factors I would consider to be important are: (a) Facebook's revenue model is relatively immature.(b) Facebook might be a trend.
*I think Facebook might even have the potential rival Google in advertising. I'm not a Facebook pessimist.
Google could fail in this same period, but it is unlikely to go through a revenue and valuation growth spurt similar to the one it has had over the past decade. Google is now settled into its middle-age and it is no more likely to come up with another money-printing machine like search advertising than any other company. Facebook has a fraction of Google's revenue and it is possible that they will figure out how to monetize their assets in a manner similar to Google, but it is also possible that they screw up or are blocked by social/legal barriers and are unable to realize the potential that everyone is imagining them to be capable of.
The possibility of Facebook cratering is far greater than the possibility that Google will crater, but the possibility of Facebook reaching Google-like revenues is much more likely than the possibility that Google will double their revenue over a similar time period.
It can, but on the other hand they aren't telling new hires that Google could be a $2 trillion company and that would make their stock options worth an amazing amount (which would be the same amount of increase for Google that Facebook is suggesting). They're just handing out stock that's already worth a lot.
Would love to hear some input from someone more experienced than I.