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Andreessen: Facebook Revenue Expected to be "Billions" In 5 Years
engine




msg:3946984
 3:00 pm on Jul 6, 2009 (gmt 0)

Andreessen: Facebook Revenue Expected to be "Billions" In 5 Years [reuters.com]
Facebook will likely be posting billions of dollars in revenue in five years, up from about $500 million this year, according to Silicon Valley entrepreneur Mark Andreessen who sits on Facebook's board.

Andreessen told Reuters that the world's most popular online social network could pile up $1 billion in revenue this year if it pushed harder on selling advertising.

But he added that it was more important at this stage for social sites like Facebook and Twitter to retain and grow their user base and capture market share, rather than worry too much about making lots of money right away.


 

StoutFiles




msg:3946999
 3:28 pm on Jul 6, 2009 (gmt 0)

The day will come when Facebook will fade out.

Besides that though, how well do ads do currently on there? I would assume everyone on Facebook wants to socialize and not be directed elsewhere.

Chico_Loco




msg:3947008
 3:40 pm on Jul 6, 2009 (gmt 0)

But he added that it was more important at this stage for social sites like Facebook and Twitter to retain and grow their user base and capture market share, rather than worry too much about making lots of money right away.

This is a dangerous statement. On the one hand, he is right in that it's best to focus on core values over monetization in the early stages so that you capture a maximum following, however if you change course too much at a later point by injecting too much advertising, then the amassed following will go elsewhere.

The excess number of people joining facebook will lower the quality of the network. The introduction of ads will make the site less pleasurable. But, other start-ups won't suffer from these problems, so my bet is that one of them will take over as the "new facebook" a couple of years down the road.

2clean




msg:3947010
 3:41 pm on Jul 6, 2009 (gmt 0)

"it was more important at this stage for social sites like Facebook and Twitter to retain and grow their user base and capture market share, rather than worry too much about making lots of money right away"

Read: it's better to gather as much personal information on any many users as quickly as possible before any laws gets changed. Monetizing can always be applied when it does change.

BillyS




msg:3947012
 3:50 pm on Jul 6, 2009 (gmt 0)

>>Facebook will likely be posting billions of dollars in revenue in five years.

And my website will be making tens of millions in five years....

physics




msg:3947036
 5:01 pm on Jul 6, 2009 (gmt 0)

Part of me agrees with the statements on here but then I remember that everyone was saying the same thing about Google - which was 'just another search engine' and was losing money faster than you could imagine pre-AdWords.

weeks




msg:3947040
 5:04 pm on Jul 6, 2009 (gmt 0)

Hey, me too, BillyS! (Exactly what I thought.)

Seriously, this was interesting:
"This calendar year they'll do over $500 million," Andreessen said in an interview, noting that Facebook has more than 225 million users, so revenue per user is still small.

OK, that's $2.22 a user in income a year; less that 19 cents a month. Knowing what we know about scale (a some point, big is more dollars in cost, not less), are they making a profit?

It would seem they could do much better easily. But, reading what is said here, maybe not. Their next step is not obvious to me. Maybe sell out to Pepsi or Coke? That is someone who would like to have their brand in front of millions each day. OK, but at what cost? Would they (maybe with a couple of others) be willing to pay for what it takes to run Facebook? Would be it worth it? That's the question. And the answer is,...

Facebook lacks context. Ads are sold in context. Google is good at that. Newspapers less so, but better than Facebook.

Even TV ad are sold in context. Sports and beer are together not just because men watch sports and drink beer. Cars are sold on dramas because of the environment and who watches, both. Facebook is...there are few overarching contexts a marketing person would be comfortable with using.

[edited by: weeks at 5:09 pm (utc) on July 6, 2009]

Jane_Doe




msg:3947042
 5:08 pm on Jul 6, 2009 (gmt 0)

Andreessen told Reuters that the world's most popular online social network could pile up $1 billion in revenue this year if it pushed harder on selling advertising.

If their revenues are only 50 percent of what they could be this year, then I say it is time for Facebook to get a new board of directors. :)

Marc Andreesson should try his hand at affiliate programs or Adsense so he can tell how much revenue some pointless quasi blog makes versus even a really, really lame page makes that ranks for "buy comcorders online".

[edited by: Jane_Doe at 5:11 pm (utc) on July 6, 2009]

BradleyT




msg:3947043
 5:08 pm on Jul 6, 2009 (gmt 0)

Pageviews on FB are so over inflated in terms of being able to generate revenue.

The board of directors need to sign up for Mafia Wars and see how many tens of millions of impressions per day are generated with pretty much 0% chance of clickthroughs.

swa66




msg:3947070
 5:57 pm on Jul 6, 2009 (gmt 0)

Yep, the games on facebook create zillions of page impressions without the user ever going to look at the ads. They claim about 4M users of e.g. Mafia Wars every day ...

The ads themselves: well those run by facebook virtually all look like scams where I live, even half of them are in the wrong language. Why would anybody ever click on any of them?

If you spend what they spend/have the income they have, you can do much better. Get on the phone with Coca-Cola and Pepsi's ad agencies and don't accept no for an answer ...

esllou




msg:3947098
 6:31 pm on Jul 6, 2009 (gmt 0)

I'm surprised no-one has yet mentioned another big possibility for revenue generation: subscription fees.

Maybe that's why they're holding off too: get everybody so ingrained into FB that, in 2011 when the announce the "$10 a year" fee, people will want to hold onto their years and years of contacts, photos, game scores, mails and everything else.

Sound feasible?

I personally wouldn't pay a shiny dime for FB but plenty would.

StoutFiles




msg:3947112
 7:01 pm on Jul 6, 2009 (gmt 0)

Once Facebook tries to get subscriptions...well, that will be the death of Facebook.

weeks




msg:3947143
 7:37 pm on Jul 6, 2009 (gmt 0)

Maybe that's why they're holding off too: get everybody so ingrained into FB that, in 2011 when the announce the "$10 a year" fee, people will want to hold onto their years and years of contacts, photos, game scores, mails and everything else.

Sound feasible?

I personally wouldn't pay a shiny dime for FB but plenty would.

I agree with stout; there would be a mass move to something else. The social consumer is fickle.

What is needed (and I want you to remember that you heard it from me first) is a very, very low-priced up-sale to Facebook Gold. Some kind of new little handy gimmick that can also and evoke status on the board as well. You need to live painlessly without it, but enjoy doing <something> more with it. Oh, and in the price include a contribution to the World Wildlife Fund or something.

Going to be very, very tough. And it's going to be hard work and slow going. And the investors do not want to hear about hard work and slow going. They want easy and quick. Indeed, Facebook needs to stop looking for that one big idea and work up about 1,214 smaller ideas, each making some money. That's what real companies used to do.

Edge




msg:3947250
 10:25 pm on Jul 6, 2009 (gmt 0)

Hurry everybody! buy stock!

rehabguy




msg:3947305
 12:09 am on Jul 7, 2009 (gmt 0)

Darn, it looks like I'm going to be the YAY-sayer...

I hate facefook, my wife loves it, so I'm neutral.

However, only PEOPLE spend money. So if you capture PEOPLE, you will make money. End of story.

Facebook has a huge head start on all social networks. Therefore, it's almost impossible for anyone else to catch up, kind of like Google and search.

There you go - a prediction from someone who doesn't even like the product.

Jane_Doe




msg:3947333
 1:34 am on Jul 7, 2009 (gmt 0)

So if you capture PEOPLE, you will make money. End of story.

You can make money with high volumes alone, because there are always some people ready to click or buy anything if you have enough visitors, or you can use impression based ads based on traffic alone, but in my experience commercial sites in well paying fields with targeted traffic can make the same kind of money as generic sites on maybe 1% of the traffic volumes.

shri




msg:3947346
 2:10 am on Jul 7, 2009 (gmt 0)

>> So if you capture PEOPLE, you will make money. End of story.

If you capture people in the right frame of mind, you'll make money. That's why its all about location, location and location, even online.

Facebook is one of those locations which has never converted for a LOT of businesses (even for the branding value as it seems to have a very low recall factor).

We've tried dozens of variations and given up. Heck, ads on buses and print media work a lot better for our e-commerce than Facebook does.

GrendelKhan TSU




msg:3947352
 2:15 am on Jul 7, 2009 (gmt 0)

we've been down this road before..

ADS and SUBSCRIPTIONS are NOT the only way Facebook could monetize. Those are, in fact, the least creative or interesting or as ppl like to theorize ... feasible in the long run.

eg: does anyone here realize flash games on facebook book make millions?

think apple app store or cyworld "acorn" system for just two examples of ways to monetize.

weeks




msg:3947353
 2:15 am on Jul 7, 2009 (gmt 0)

So if you capture PEOPLE, you will make money. End of story.

Ask anyone in the news industry. Lots of traffic, little context, not enough ad money.

It's possible--I just don't know how--to provide enough context to provide enough high paying ads to provide enough money to make it go. That is the issue. Maybe they'll find a way. But, huge traffic alone, today, doesn't do it.

Facebook is an innovative web site that is popular. In needs an innovative business model. There is an opportunity there. Somewhere. Probably. Maybe.

GrendelKhan TSU




msg:3947354
 2:16 am on Jul 7, 2009 (gmt 0)

Facebook is an innovative web site that is popular. In needs an innovative business model. There is an opportunity there. Somewhere. Probably. Maybe.

if we switched the order of our posts...that'd have been perfect. LOL

we've been down this road before..

ADS and SUBSCRIPTIONS are NOT the only way Facebook could monetize. Those are, in fact, the least creative or interesting or as ppl like to theorize ... feasible in the long run.

eg: does anyone here realize flash games on facebook book make millions?

think apple app store or cyworld "acorn" system for just two examples of ways to monetize.


gpilling




msg:3947365
 2:43 am on Jul 7, 2009 (gmt 0)

Marc Andreesson should try his hand at affiliate programs or Adsense so he can tell how much revenue some pointless quasi blog makes versus even a really, really lame page makes that ranks for "buy comcorders online".

He has, it is called Ning.com . Personally I think that if a person has sold not one, but two companies for a billion plus then maybe he knows something that I don't. With Ning, I can see it lasting a lot longer than Facebook, since everyone can spin their own little network site, while still being tied to the big one. Ning is already set up from the beginning to be free, or not free depending on your choice.

Time will tell. While I have a facebook account I never post on it save for occasional ping.fm posting. So what do I know?

GrendelKhan TSU




msg:3947369
 2:53 am on Jul 7, 2009 (gmt 0)

hmm..didn't know ning was a Andreesson thing. Its actually pretty good. I've used it for some work sns marketing stuff.

Jane_Doe




msg:3947383
 3:32 am on Jul 7, 2009 (gmt 0)

He has, it is called Ning.com . Personally I think that if a person has sold not one, but two companies for a billion plus then maybe he knows something that I don't

Lots of dot.com companies have sold for millions that never made any money for the people that bought them. Remember the dot.com crash?

Is ning actually profitable? Does it have any net profits?

[edited by: Jane_Doe at 3:33 am (utc) on July 7, 2009]

skibum




msg:3947409
 4:52 am on Jul 7, 2009 (gmt 0)

Facebook will either be HUGE or fade away into nothing. From my experience there are still lots of big corps out there that are willing to throw megabucks at search and banners and the only thing they look at is clicks and impressions. Tell them they can target women 30-35 years old, with incomes 50-100K who are single, list their profession as x,y or z and then even more specific criteria and they will probably pony up once they realize they can target that specifically.

I think Facebook traffic is essentially forum traffic which is generally worthless to most advertisers unless they can spam the actual forums well. But when everyone and their grandmother willingly posts their entire life on Facebook and records all their conversations and interests on the site, it may be a gold mine for advertisers who want to hit those specific demos.

With all the stuff ad servers can track don't be surprised to see Facebook publish white papers that claim Facebook advertising drove crazy sales and ROI numbers. It will be based on people who "saw" or "were exposed" to ads and not based on people who actually responded (i.e clicked) on them.

I'll put my money on search any day.

JohnRoy




msg:3947422
 5:30 am on Jul 7, 2009 (gmt 0)

According to websiteoutlook [don't know how accurate their sources are]
Ning lets you create and join new social networks for your interests and passions.
Daily Pageview 7051282
Daily Ads Revenue $21156.67

incrediBILL




msg:3947450
 6:26 am on Jul 7, 2009 (gmt 0)

Lyrics from a SuperTramp song come to mind:
"Dreamer, you know you are a dreamer"

Jane_Doe




msg:3947770
 3:55 pm on Jul 7, 2009 (gmt 0)

Ning lets you create and join new social networks for your interests and passions.
Daily Pageview 7051282
Daily Ads Revenue $21156.67

"After raising $44 million last July, Ning has raised another $60 million, cofounder Marc Andreessen reluctantly announced....Why the eight-figure round for a startup whose annual revenues are likely in the low seven figures? Andreessen says he wanted to "make sure we have plenty of firepower to survive the oncoming nuclear winter." "

[gawker.com...]

skibum




msg:3947780
 4:18 pm on Jul 7, 2009 (gmt 0)

Andreessen has a new 300M venture fund. Wonder why he isn't putting his funds money in the Ning pot.

[money.cnn.com...]

mfishy




msg:3947844
 5:48 pm on Jul 7, 2009 (gmt 0)

FB ads work well if you know what you are doing and the volume is pretty significant. Editorial policy is a bit prohibitive though.

rogerd




msg:3948357
 12:13 pm on Jul 8, 2009 (gmt 0)

If current revenue is $500 million, surely "billions" isn't that big of a stretch considering their growth and user retention rates. While I agree that monetization is a challenge, both ad and subscription models could boost revenue to the 10-figure range.

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