A few months ago, Microsoft handed Facebook a $240 million wad of cash. Microsoft's new equity boosted Facebook's estimated value to $15 billion (by comparison, that's three times Monster.com's market cap of $4.8 billion). At the moment, Facebook's ad revenues don't come close to a $15 billion dollar value, so there's something up their sleeves that we probably don't know about. We do know that they will be racing to justify that ambitious valuation by doing some more edgy—and profitable—stuff Here are a few things I've noticed or heard of unfolding on Facebook.
Newsfeed Owns You: The newsfeed was designed to increase the time of the average visit. Clearly, increasing this number means is directly increasing ad revenue. And guess what? Just weeks after launching, Newsfeed doubled the average visit time for Facebook users. Hot damn. Makes you wonder how they do it?
The content that shows up on your Newsfeed is selected to keep you on the site. That means, either you have found these people interesting in the past, or other people have found this stuff really interesting. Think about it next time you login. The people you stalk will probably show up more often than not.
Gifts are for charity. For now. Facebook invented the notion of a virtual gift and has done extremely well with it. For the time being, it seems to be all for charity, but Facebook's intentions are far from philanthropic.
When you buy a gift for a dollar (or buy an ad), you have the option of saving your credit card info with your account info. This is a BIG DEAL. Heard of Amazon's One Click Checkout? I am sure we will one day see Facebook-sponsored stores like GAP complete with a One Click Checkout. Gotta stay fly.
Skimming off the top: Speaking of Amazon, Facebook got in bed with the company on its Marketplace Book Exchange. When you fill in the ISBN of whatever book you are looking for, Facebook readily points you towards a link to Amazon. This is because they see anywhere from 4% to 10% in referrals from that book you purchase.
Targeted Advertising: Every 10 or 20 times I log in, I see the same Facebook ad for Union Square Ventures - a venture capital firm based in New York. A technology VC firm would probably be smart enough not to waste time advertising to all the kids at Columbia. But this is the perfect example of Facebook's recently-launched advertising platform: in my profile, "start ups" is listed as one of my interests. And since Facebook is getting paid per click, they allow advertisers to target their ads with user's personal profile content. It's kind of like Adwords--but we're talking about our personal information here.
What are these applications about? Be careful when you install an application. It is too easy to install an application, you're giving away a lot of information, and the application developer can pull all of your personal data from your profile. They can also pull a ton of data from your friends' profiles. And here's the real danger: anyone can develop a Facebook application and launch it. There are sites that will even do it for you. So with a decent application name and a cute picture, a developer could compile a lot of personal data very quickly, which can be used for all kinds of identity theft. And since it's an open platform, Facebook cannot place any technological constraints on this data (they do place legal constraints on it, however).
I think we will eventually see a lot of really useful applications developed. For the time being, a lot of cheesy applications aim to gain tons of users and sell their adspace. Others want to make money through less legitimate ways—this one gets paid every time they get you to download a worm that will then send information from your desktop to advertisers.
Takeaway point: as much as Facebook "friends" aren't necessarily real friends, Facebook itself is no pal either. Treat it like the acquaintance you enjoy once in a while, and watch out for its tricks.
a bit paranoid, but totally right on.