Has Facebook missed the boat by not being acquired by Yahoo, or is it just getting warmed up? A MediaPost piece by Gavin O’Malley showcases some opinions supporting the former:
“They’re not going to see that kind of money again,” said Jupiter Media analyst Emily Riley at an industry event on Monday.
Riley, of course, was referring to Yahoo’s effort to buy the thriving social network for around $1 billion–a deal that never materialized because Facebook’s young founder and CEO Mark Zuckerberg reportedly wanted to grow the company independently.
“Boy, did he miss a big opportunity,” mused David Rittenhouse, group planning director at [email protected], at the same event Monday.
“The buzz over social networks has moved on now to ad networks,” said Riley.
Seconding the notion, Gartner analyst Andrew Frank said: “I think there’s definitely a sense that the market is focused somewhere else.”
The other reason social networks face an increasingly uncertain future is a growing industry-wide suspicion that such sites may never–relatively speaking–become strong revenue drivers.
“There’s now a considerable, and I’d say legitimate, suspicion of that,” Frank said. “I think there’s strong evidence that however one makes money [from social networks], it’s not as easy as translating eyeballs into CPMs.”
Those are rational criticisms, but then nobody thought monetizing search was scalable in a big way until Google figured out how to do it. The WSJ article on Facebook yesterday suggests that Facebook dreams of being the next Google, and don’t we all, but Google is a tough act to follow, i.e. creating that kind of money making machine. But for Facebook to succeed it doesn’t need a record-shattering home run like Google — it just needs to remain independent and scale profitably.
The introduction of classified ads and Facebook’s new open platform for third party services may not have a clear business model yet, but they could take Facebook beyond the de facto low CPM advertising business model into more innovative and profitable models.
A Facebook IPO? It’s certainly plausible, but that would require Facebook’s business be in a very different state from that of MySpace and YouTube at the moment of those big exists, i.e. a profitable, growing business that can deliver significant returns for shareholders.