If you haven’t already heard, Facebook has a valuation of $15 billion. That’s fifteen billllion dollars, I’m quoting Doctor Evil there. Why is it valued so high? Every day Facebook adds another 100,000 users. It has 35 million active users and underneath that it has over 6 million active user groups.
According to the WSJ, Facebook is going to make close to $30 million this year. More incredibly Facebook costs nothing to use. So this begs the question, how is it going to make 30 mill and why is it valued so high? The answers are traffic, data, and advertising. Similar to what Google has done with AdWords, Facebook has the built in luxury of 35 million users with deep data points to pitch. The other reason why the valuation is so high is that what makes Facebook so attractive is that the data is essentially user data.
Google Adwords relies on keyword contextual data but Facebook can get down and dirty. If it wants to go after sophomore high school students in Trenton, New Jersey, it can. Or lets say, college graduates from UCLA from 2004, that hail from Long Beach, it can do that too. It has the ability right now to target by age, gender and location. Eventually it will be able to automatically target its users based on the personal information that users have supplied.
What we don’t know is what the finished product of Facebook will eventually be. Mark Zuckerberg has stated that it could be 30 years before we finally see what the last iteration of Facebook could be, and that it could be very different from what it is now. It’s amazing that when he started Facebook, he was 19. His initial intent was to create a site that showed you who was in certain classes at Harvard, so that you could make a more than educated decision of what classes you wanted to take and with whom. Amazing how something that started out as a mere tool or app for a college campus has turned into a social networking phenomenon. It reminds me of Napster.
I’m sure what a lot of people are thinking, or rather a lot of marketing people are thinking, is how they can get in the slipstream of Facebook. What this means is, how can a marketer create a business that is a direct result of the creation of Facebook? Google has spawned the creation of 1000’s of companies that are around because of Google. I’m sure we can expect the same thing with Facebook.
What do you think will happen with Facebook? Are you a part of Facebook? Do you use it regularly? What will the landscape of social networks look like in 2 years?