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article imageOp-Ed: Facebook hits 1 billion users, market wants to see the money

By Paul Wallis     Oct 4, 2012 in Internet
Sydney - The day Facebook hit 1 billion users coincided with another session of the market looking at Facebook revenue and demanding to see more revenue. This has become a more or less daily chant. Ever since the IPO, the market has been howling for returns.
The revenue issue is a dead weight based on the incompatibility of New Economy companies like Facebook and investor mindsets. That was obvious from the start. People who want other people to make money for them aren’t usually happy unless the floodgates of cash are open. The investor market in particular is rarely satisfied with anything except exponential growth.
While the expectations of the IPO may have been unrealistic, not to say downright ridiculous, this time they have a point, even if they didn’t make it directly and are part of the problem. Facebook does need to add some firepower to its earnings options. Ad revenue, as anyone with an AdSense account knows, is a slow-moving thing at best.
The situation is simple-
Those one billion users aren’t there to do business. Nor is there any good reason for them to do business on Facebook when they can do it somewhere else. Facebook users aren’t likely to take kindly to being charged for membership, so that’s simply not a revenue option. If any money at all is to be made out of Facebook members, there needs to be an incentive and some sort of value to them.
For Facebook to make money out of its users, it has to be a party to, or carry out, commercial transactions that make money. It has to supply the things members are prepared to pay for. Facebook isn’t exactly a startup, but it will have to think like a startup in this area, because it hasn’t really done this before on anywhere near the scale it needs.
For example:
Apps- A Facebook app store would be a natural default stop for users.
Games- Facebook games are popular. Turn that into a commercial option. Facebook could run multiple MMORPGs. (Nobody’s bitching about World of Warcraft’s income stream, and that’s just a very functional array of paid software in combination with paid rates options.)
A Facebook Commercial site or sub site- You want to go shopping, here it is.
Ad rates- Why not charge real commercial rates for listing ads? This “per milliard” crapathon isn’t worth peanuts. What’s an ad on Facebook actually worth, when it has a billion possible viewers? $1? $10?
Facebook TV- Facebook’s answer to YouTube, or a simple paid service, broadcasting shows? Net cost, peanuts. You can buy that sort of software off the shelf and run it on any site.
I work in the advertising/marketing industry, and it fascinates me that all the market based experts talking about social media haven’t got the message yet. The social media experts get it, but these guys don’t. The marketing on Facebook has been strictly amateur, half-ass stuff. At best, a few good companies have created a functional mechanism which delivers good CRM and some values to consumers. Others set up a Facebook page and expect to make millions from people who don’t even know they’re there.
Let’s spell it out, since this very basic message obviously isn’t getting through-
What the hell’s wrong with something basic, like “Facebook special deals”? It’s so obvious. It’s also easy to run things like that online. Online shopping is going through the roof, and these guys don’t get that?
Facebook’s revenue problems stem from a lack of development of new options. It’s that simple. Those 1 billion people might want to buy, use services, whatever, but who knows? The smart move would be a pilot program, checking out responses to revenue generating options.
The market can also blame its own lack of initiative in waiting for Facebook to do its job for it. You want to do business, then do business. Don’t just bleat about it.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
More about facebook revenue, Facebook 1 billion users, facebook marketing, Facebook applications, facebook games
 
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