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Forget $3B In Revenue: Things "Don't Look Good" For Facebook

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Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#61

Post by alain94040 »

mmaunder wrote: post #35
pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

It does raise the question "What is Facebook's Killer business model?". They have defaulted into ads because that's what Google did and that's what works for many other businesses. But I've never clicked on a Facebook ad and I don't know anyone who has unless it was research. I'm seeing highly targeted ads based on my interests and demographic and I just don't click because I'm too busy social networking. Whereas wit…

Even "techies" click on Facebook ads. I can share my experience: how do you raise awareness for a startup conference, since obviously no one goes on Google to search for it. Facebook is great at telling you about things you may want to know, but are not currently looking for.

The reason it works for Facebook is because of the amazing (scary) imformatiom they have on their users. But it can be put to good use.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#62

Post by blantonl »

This is exactly why Facebook should not do an IPO. Regardless of whether or not these rumors are true, hungry public investors will demand significant revenue and profit growth regardless of long term plans and prospects.

I'm afraid that this IPO is going to be a mess.

This might be where we see Zuckerburg get in over his head.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#64

Post by blantonl »

pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

badness such as this IS background radiation, but for private companies. On the eve of a highly anticipated IPO, these types of rumors that strike at the core of Facebook's business could quickly blossom to full-on nuclear fusion - regardless of whether or not they are true.

I don't disagree that Facebook's prospects look extremely strong, but I do think that their decision to IPO now was wrong and potentially sets up a poisonous precedent for how they run and manage their business.

Facebook is still figuring out how to properly grow their revenue model, and now they'll be faced with the very public distractions of being a public company. Not only that, it opens up all kinds of intelligence for competitors.

I think that Mark and his team are in for one heck of a ride this year. And it isn't going to be fun.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#65

Post by gojomo »

tatsuke95 wrote: post #41
pg wrote: post #37

Earlier quoted context omitted.

Facebook hasn't missed any earnings estimates. This is just a rumor, reported by a company I've never heard of, that they might. You can presumably find rumors of that type about almost any company.

And that's exactly what we're discussing: a rumour. You're right that this may prove to be completely out to lunch. If so, I'll eat my hat. That said, Facebook is, for better or worse, the biggest thing this industry has seen in a while. So that fact these rumours are being discussed in earnest, rather than "Facebook is still on such an insane revenue growth path that anyone who claims otherwise is an idiot" is subst…

The fact that these rumors are being discussed... is substantial.

The statement is self-refuting.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#66

Post by jonnathanson »

pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

I tend to agree. Call me crazy, call me naive, call me idiotic, but I just don't see any actual problems for Facebook until/unless a serious competitor for its userbase emerges. Pinterest isn't (yet?) that competitor, inasmuch as it's not currently a substitute for Facebook; they seem to cohabitate pretty well. Other interest-based networks aren't competitors for the same reason. Google+ doesn't seem to be making much of a dent, probably because the switching costs of rebuilding a social network from scratch are more daunting for most users than anyone expected.

That's not to say a competitor won't emerge, and users won't switch to that competitor if Facebook really mucks up its UX in some unforgivable way. But we should bear in mind that Facebook users aren't just going to jump overboard into the ocean. If they're going to jump ship, it'll be because a better ship has pulled up alongside it.

Revenue challenges? Facebook's got plenty of time to figure those out, and meanwhile, Facebook Connect seems like a pretty powerful weapon of mass monetization in the making.

A lot of the anti-Facebook sentiment out there right now reads like wishful thinking.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#67

Post by RobPfeifer »

chintan wrote: post #53
mmaunder wrote: post #35

Earlier quoted context omitted.

It does raise the question "What is Facebook's Killer business model?". They have defaulted into ads because that's what Google did and that's what works for many other businesses. But I've never clicked on a Facebook ad and I don't know anyone who has unless it was research. I'm seeing highly targeted ads based on my interests and demographic and I just don't click because I'm too busy social networking. Whereas wit…

>But I've never clicked on a Facebook ad and I don't know anyone who has unless it was research. I often hear this on HN and from other techies. I bet you've never ran a serious Facebook or any other Ad campaign and measured effectiveness (in terms of business ROI). I used to think like you, but they do work (even 0.05% click thru rate is considered effective!) and hence these companies make billions of dollars. Plea…

In my experience, click-through rates aren't that great and conversion is really pretty bad. I've worked at 2 decent size ecommerce companies and the CPO hasn't ever really been profitable for social media ads especially compared to Google and Bing ads. Their advertising is really more comparable to traditional display or remarketing ads at this point which are generally less efficient for marketing spend and hence less profitable for FB's customers.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#68

Post by ceejayoz »

koalaman wrote: post #44
cs702 wrote: post #28

Some advertisers are getting much better results with Facebook ads than with Google AdWords -- for instance, see http://jeffmatthewsisnotmakingthisup.blogspot.com/2012/01/is... (Money quote from that link: "...according to a friend in retailing, the average Facebook woman updates her relationship status to 'Engaged' within two hours of the guy actually proposing…so Facebook sells that relationship status information…

http://www.facebook.com/legal/terms "We do not give your content or information to advertisers without your consent."

May have just been an inelegantly worded way of saying "we can target people for Facebook ads on this sort of variable". Facebook doesn't have to release the "so-and-so got married" information to the advertiser, they just have to show that demographic the ads.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#69

Post by programminggeek »

Things look amazing for FB. Seriously. So many opportunities for growth.

Imagine FB credits at local merchants... Imagine FB Social Ads for content publishers... Imagine FB running their own mobile ad network...

Sure, FB is kind of AOL all over again, but this time around FB (unlike AOL) has no intentions of cashing out to some media conglomerate.

Facebook is more like this decade's Google like Google was last decade's Microsoft.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#70

Post by yoklov »

jonnathanson wrote: post #66
pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

I tend to agree. Call me crazy, call me naive, call me idiotic, but I just don't see any actual problems for Facebook until/unless a serious competitor for its userbase emerges. Pinterest isn't (yet?) that competitor, inasmuch as it's not currently a substitute for Facebook; they seem to cohabitate pretty well. Other interest-based networks aren't competitors for the same reason. Google+ doesn't seem to be making muc…

I might be wrong, but I don't think the question is "will Facebook be overturned by another social network?" so much as it is "are social networks even profitable?"
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