I have, so far, refrained from joining the hype machine around Facebook. However, things are plain out-of-control right now, with rumors about them turning down $6 Billion acquisition offer from Microsoft, and more recently, that $10 Billion is what they think they’re worth.
All this, on an annualized revenue of how much? $150 Million, right?
So, I want to discuss the obvious question: how does Facebook monetize?
To answer this question, I will bring you back to the two fundamental articles I have written about what I see as Web 3.0:
Web 3.0 = (4C + P + VS) and Web 3.0 & the Semantic Web. In these two articles, I articulated my vision of a Verticalized, Personalized web, organized by Context.
So with that assumption as Exhibit A, let’s ask the question what do Facebook’s users do online? The answer is, the same things that the rest of the web universe does. They try to find a mate, look for a job, look for a car or a house, shop, download music, share videos, photos, etc. Notice, all these activities align with the big verticals online that have so far generated large chunks of online revenues.
Let’s take the example of the Online Jobs vertical. Yahoo bought Hotjobs, thwarting Monster’s effort to consolidate the space. Today, Jobs is one of the top online segments in the US with $5.9 billion online advertising revenues, which constitutes around 25% of Internet ad revenues in the US. The top players in the online jobs market are CareerBuilder, Monster, Yahoo! HotJobs and vertical search engines like Indeed, Jobster and SimplyHired. According to Hitwise, CareerBuilder is the leading job site in terms of web visits with 13.73% visits, followed by Monster (11.51%) and Yahoo! Hot Jobs (5.33%).
Monster is an independent public company with a 2006 revenue of $1.1 Billion, and a market cap of $5.37 Billion.
You can read about the Online Job Industry on my site. and reviews of the strengths and weaknesses of the top 3 properties for the segment: CareerBuilder, Monster, and HotJobs, based on the Web 3.0 framework described above.
So, explain to me, why Facebook should not become a major player in the Online Jobs area, and pick up a large chunk of $6 Billion Total Available Market for that segment? Considering that it has in its database the cream of the US educational institutions, Facebook’s Online Job / Career Management offering is one that is a no-brainer!