7 ms·

Forget $3B In Revenue: Things "Don't Look Good" For Facebook

deleted 15y ago
[deleted]
- kenrikm 15y ago
  Free Fall? I have not seen any numbers to support that statement, they may not be growing as quickly which is understandable as they get closer to the cap of total internet users however their numbers are not negative (yet).
mikehuffman 15y ago
I would not be surprised if the government directly began to subsidize facebook, just for the incredible amount of personal information they could mine. Another scary thought is a company like equifax, buying into facebook.
- rhizome 15y ago
  They're called the Carlyle Group and they bought in nearly at FB's beginning. EDIT: Looks like the Google News Alert has reached Carlyle Headquarters. Expect silent downvotes.
  - ryanwaggoner 15y ago
    I downvoted you, because: 1. You didn't provide any source for this (and I can't find anything online to back it up; granted I only searched for a few minutes). Facebook isn't listed in their portfolio, for example: http://www.carlyle.com/Portfolio/Alphabetically/item8774.html http://www.carlyle.com/Portfolio/Alphabetically/item8774.htm.... And I couldn't find any mention of the Carlyle Group in the Facebook S-1 filing, either. You could be right, but I'd like to see the evidence. 2. The Carlyle Group is a huge private equity firm that owns all or part of hundreds of companies around the world. Suggesting (without any evidence) that they own these companies as some shadowy method to share private data across them is ridiculous. Your edit makes it even more clear that you're more interested in some kind of conspiracy theory than the obvious truth, which is that the Carlyle Group either didn't invest in Facebook or did so because they thought they'd make good money. And if they invested early, like you say, then they were right.
    - rhizome 15y ago
      Thanks for the reply. I'll try to look up connections, but for right now it seems to be impossible with Google SERPs including Facebook mentions of Carlyles the world over. That is, search for anything "facebook" on Google and you'll get a million FB pages due to the word "Facebook" in every page title. Sigh, Google.
      - cbr 15y ago
        Why not exclude facebook.com from the results? "facebook carlyle -facebook.com"
kposehn 15y ago
I'm kind of smelling some negative press push here about the IPO. A lot of the stuff doesn't seem to add up - despite supposedly solid leaks about documents, etc. What this might be an indicator of is a dedicated effort to push the stock price post-IPO lower so that various traders/funds can make a nice chunk of change off a rebound post-earnings. I'm fairly skeptical of this sort of conclusion - especially about supposed ad revenue or other issues - due to my personal experience using the platform. I have spent a small fortune (of my own money) on online advertising as an affiliate for several years. Out of all the various ad networks and venues, the most consistently profitable has been Facebook, bar none. On a typical campaign, I'll net a 200-300% profit on my ad spend. Compare this with 60-100% on Google AdWords and 50-65% on Bing. Don't even get me started on buying display ads. I'll spend any free ad budget on FB before any other network, simply because I _know_ I'll profit from it - the risk is far lower and the margin far higher. I guess my point is, like when Google started, people just don't get the power that FB holds when it comes to advertising. Storefronts in FB were never the point - what is far more important is engagement and interest. Facebook is king when it comes to that.
- tokenadult 15y ago
  I'll spend any free ad budget on FB before any other network, simply because I _know_ I'll profit from it - the risk is far lower and the margin far higher. After reading that, I went to your HN profile, where you write, "Entrepreneur and rabble-rouser with an eye for monetization and innovative business concepts. Tempered by the reality of being an affiliate marketer for 3+ years. Forged in the fire of having to compete tooth and nail to succeed in that industry. Prone to writing silly and/or odd descriptions of himself. Named his company after his cat." I still don't know what industry you are in, but I suppose different businesses in different industries get different results from Facebook ads. I don't know either how Facebook compares to the great majority of places to sell advertisements online, but isn't it possible that your experience is exceptional, and that there aren't enough businesses like yours to sustain a business with the expenses Facebook has?
  - kposehn 15y ago
    Good point. I have given a lot of thought to sustainability with Facebook Ads, and my optimism follows the basic data of my experience ever since it opened up. Originally, low CPC's were quite commonplace. I could advertise something and get a pretty good rate - $0.10 or so - and make some really good money. Over time, the base CPC has risen across the world. Right now, you're looking at $1.20 or so just to hit the US untargeted (this isn't the suggested bid, this is actually running all-US ads). What is really telling however is CPC's on very tight interest groups. Let's say I target a set of interests in a city that gets me about ~2k people in the profile. It used to be, even a year ago, that I'd pay about $0.80 per click. Today, you'll be lucky to find $1.30 on the low end. As niches get narrower and people get better at mining interest, the CPC climbs. Long term, sustained CPC trends are clear indicators of increasing demand and the ROI to sustain them. Why this isn't talked about so much has to do with barriers to entry. I'm telling everyone here a lot about what I do without revealing the finer details. Also, I would say that as with any venue, some products do better than others. You can sell big-ticket stuff on FB, you just have to go about it much differently. You can lose a lot of money on Facebook quite easily, so how you approach the market is a big factor. That said, the secrecy surrounding the success FB advertisers like myself are having is a much stronger indicator than anything that is said publicly. Will it keep FB from missing earnings targets? Probably not, but I remain very bullish on where they are going and what they have to offer.
phuff 15y ago
The graph in this article shows revenues continuing to go up over the next 3 years... Just at a slower rate. That doesn't sound like "things don't look good" but more like "things don't look as amazing as they did, but still look pretty good." Of course, I have no idea about the validity of the underlying data in that graph... But still, it totally doesn't match up with the analysis of the numbers presented in the text. Not that I'm a facebook investor or anything... On the contrary... :)
- VikingCoder 15y ago
  Let me give you a sneak peek into an investor's mind: "Slow, sustainable growth? SELL!"
  - orthecreedence 15y ago
    You're thinking of a trader.
    - ohashi 15y ago
      To be fair, even if I were an investor looking at the long term, the time to buy wouldn't be now with a PE that high and expecting slow and steady growth.
- tatsuke95 15y ago
  When your P/E is greater than 100, people are expecting mad growth in the future. Growth slowing already? That's bad news for people looking at investing.
  - scylla 15y ago
    What would you call a P/E ratio over 9500? http://finance.yahoo.com/q?s=CRM http://finance.yahoo.com/q?s=CRM Both the stock and the P/E ratio has been growing for years.
    - tatsuke95 15y ago
AznHisoka 15y ago
FB will always be able to monetize their users. It's just a question of what premium. Since most people on FB have no intent on buying anything, the amount they can net per user is very very small compared to Google. In a sense, it's just like a glorified TribalFusion, where eyeballs are worth .01 each.
- seancoughlin 15y ago
  This seems right. Users are much less valuable for companies on Facebook b/c of user intent. What Facebook needs to figure out is how to channel higher value users to ads. One fix might be to create a separate search tool that focuses on "stuff" since the main search navigation is useless for finding anything except your friends.
pg 15y ago
If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together at least this much about any public company.
- ChuckMcM 15y ago
  That was my response as well, so they generate a slightly less ginomous net revenue and that is a problem how exactly. Looking at worst case numbers it looks like Facebook will be close to 'accumulating cash' mode at the outset. That is a pretty good thing. Now it would be nice to get some more visibility into their execution against advertising system changes but this reads more like a 'place' piece where the author hopes that if things go good people will forget they ever read it, and if they go really bad he'll be on record early 'predicting' it and will be able to demand huge consulting fees :-) Of course I have no idea behind the motivations of the author, I just wondered how he can look at $5B in revenue and not be "well ok, their model is working at least."
  - viscanti 15y ago
    The biggest reason Facebook has a 100 Billion valuation is because people expect ad revenue to grow rapidly. If there are signs that's slowing down now, before they even go public, it has a huge impact on their valuation. 100 Billion is a very generous valuation, even if you expect Facebook to have tremendous growth, it's an outrageous valuation if you expect them to stay the same (or shrink).
    - ChuckMcM 15y ago
      Well if they do manage to do 5B$ revenue this year 100B would be a 20x multiplier on their revenue. Seems in line with other tech companies. But we'll have to wait until they start pushing out those quarterly reports to be sure.
- 15y ago
mlinsey 15y ago
Doesn't sound too bad at all, frankly. Someone is just trying to add a little drama to what is otherwise a big success story. It is certainly true that usage of Facebook is rapidly shifting towards mobile, and that currently Facebook doesn't have any ads on mobile. That has got to impact revenue growth somewhat. But ads coming to Facebook mobile sometime soon is about as obvious as can be - and I'd bet on them doing it in a way that takes advantage of that platform's strengths and makes their company even stronger.
- kposehn 15y ago
  Sponsored stories are coming to mobile soon, and from what I can tell actual mobile ads are following on their heels.
- tatsuke95 15y ago
  >"Someone is just trying to add a little drama to what is otherwise a big success story" It's a fallacy to conflate "success" with "hype". Facebook is going to make money and be successful, barring some unforeseen craziness. They made a billion in net income last year! However, where it seems that the tech world and the investment world diverge is in the expectations. $1BB (or 2,3,4,5) isn't enough to buy in at the anticipated price.
deleted 15y ago
[deleted]
gph 15y ago
It's always amazed me that a company's outlook can look bad even though they're profit/revenue is growing, just because said growth isn't as big as it was in the past. I can sort of see why from an economics perspective, the stock price is based on profit growth projections and if those projections don't hold up the price will naturally drop. But it still seems crazy that we continually expect and pressure our public companies into growing their profit at a rate higher than it was previously growing, otherwise they aren't hitting performance expectations. I'm sure someone with more economics knowledge can explain it in a way that makes sense, but to me that seems like a logical fallacy. We expect what amounts to continual exponential growth. Edit: Typos
- veyron 15y ago
  The question you have to ask is how they are making money. If it costs 2 dollars to make a dollar in revenue, then you are actually losing money. There's no guarantee that they will continue to make money if they tone down their spend (for example, reducing ad spend), which is why the revenue / profit quality matters.
- pron 15y ago
  The reason for that is simply that expectations are already factored into the stock price. If expectations aren't met then the stock is overvalued.
- lmm 15y ago
  See http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/ http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi... , which featured here a month or two ago.
brudgers 15y ago
>"Expect more ads as Facebook tries to meet revenue projections." As I've commented here before, I access Facebook in its own VM. The past couple of days, I have noticed a significant uptick in the number of ads displayed. However, the odds of my clicking one is no higher - just because I accepted a friend request this week from a politically conservative person who I went to high school with decades ago; it doesn't mean I want to buy a USS Ronald Regan hat.
cs702 15y ago
Some advertisers are getting much better results with Facebook ads than with Google AdWords -- for instance, see http://jeffmatthewsisnotmakingthisup.blogspot.com/2012/01/is-facebook-killing-google-no-but.html http://jeffmatthewsisnotmakingthisup.blogspot.com/2012/01/is... (Money quote from that link: "...according to a friend in retailing, the average Facebook woman updates her relationship status to 'Engaged' within two hours of the guy actually proposing…so Facebook sells that relationship status information to retailers who have bridal registries. As my pal told me, 'We’ve been looking for this for fifty years.'")
- koalaman 15y ago
  http://www.facebook.com/legal/terms http://www.facebook.com/legal/terms "We do not give your content or information to advertisers without your consent."
  - cs702 15y ago
    ...which consent most consumers will blindly give by clicking on whatever button they must click to get to their Facebook page... without ever reading such legal terms.
    - cs702 15y ago
      ...which in turns reminds me of this classic incident of regular people trying but unable to login to Facebook: http://ryankuder.posterous.com/facebook-users-think-readwrite-web-blog-is-fa http://ryankuder.posterous.com/facebook-users-think-readwrit... [Update: I'll submit this as a link. It's a classic.]
  - ceejayoz 15y ago
    May have just been an inelegantly worded way of saying "we can target people for Facebook ads on this sort of variable". Facebook doesn't have to release the "so-and-so got married" information to the advertiser, they just have to show that demographic the ads.
deleted 15y ago
[deleted]
mckilljoy 15y ago
Facebook's PE ratio is around 100 last time I checked. If a 'good' valuation is in the 10-15 range (e.g. Microsoft, Apple, Google), then either Facebook's profits earned needs to increase by 10x, or it's share price needs to fall by 10x. If Facebook's percentage revenue increase is 'only' double-digits, and shrinking, it will take years and years of earnings growth before it becomes a 'good value'. It will take 5 years at a sustained 60% yearly earnings growth rate to reach the same PE ratio Apple has today.
2pasc 15y ago
I agree with PG that this is "fake news" What few people realize is that Facebook does $3B in revenues while not monetizing two "real estates" that could add $3B each (or more) in the future: - Mobile is still not monetized at all and we are talking about 400M MAU!!!! - Facebook does not leverage the huge breadth of data it has garnered about users through their "like" actions on other publisher's website to create a much need competitor to AdSense. These two opportunities are $B opportunities easily... My only concern for Facebook would be that they focus too much on their short term earnings to justify their very bullish P/E multiple... and lost sight on consumer satisfaction. On the other hand, by doing so (like Google has in the past 4-5 years) would open the door to new startups that could start gaining some great momentum!
adaml_623 15y ago
Anybody who puts a column graph showing billions and overlays a downwards trend in red showing slowing growth is essentially lying. It's irrelevant that they have a point with regards to high P/E ratiom slowing growth and missing targets. Anyone who makes a graph shaped and coloured like that is belittling their readers.
blantonl 15y ago
This is exactly why Facebook should not do an IPO. Regardless of whether or not these rumors are true, hungry public investors will demand significant revenue and profit growth regardless of long term plans and prospects. I'm afraid that this IPO is going to be a mess. This might be where we see Zuckerburg get in over his head.
runn1ng 15y ago
"predicting Facebook's advertising revenue growth will slow" They are talking about second derivation here, right?
programminggeek 15y ago
Things look amazing for FB. Seriously. So many opportunities for growth. Imagine FB credits at local merchants... Imagine FB Social Ads for content publishers... Imagine FB running their own mobile ad network... Sure, FB is kind of AOL all over again, but this time around FB (unlike AOL) has no intentions of cashing out to some media conglomerate. Facebook is more like this decade's Google like Google was last decade's Microsoft.

deleted 15y ago

[deleted]

kenrikm 15y ago
Free Fall? I have not seen any numbers to support that statement, they may not be growing as quickly which is understandable as they get closer to the cap of total internet users however their numbers are not negative (yet).

I would not be surprised if the government directly began to subsidize facebook, just for the incredible amount of personal information they could mine. Another scary thought is a company like equifax, buying into facebook.

rhizome 15y ago
They're called the Carlyle Group and they bought in nearly at FB's beginning. EDIT: Looks like the Google News Alert has reached Carlyle Headquarters. Expect silent downvotes.
- ryanwaggoner 15y ago
  I downvoted you, because: 1. You didn't provide any source for this (and I can't find anything online to back it up; granted I only searched for a few minutes). Facebook isn't listed in their portfolio, for example: http://www.carlyle.com/Portfolio/Alphabetically/item8774.html http://www.carlyle.com/Portfolio/Alphabetically/item8774.htm.... And I couldn't find any mention of the Carlyle Group in the Facebook S-1 filing, either. You could be right, but I'd like to see the evidence. 2. The Carlyle Group is a huge private equity firm that owns all or part of hundreds of companies around the world. Suggesting (without any evidence) that they own these companies as some shadowy method to share private data across them is ridiculous. Your edit makes it even more clear that you're more interested in some kind of conspiracy theory than the obvious truth, which is that the Carlyle Group either didn't invest in Facebook or did so because they thought they'd make good money. And if they invested early, like you say, then they were right.
  - rhizome 15y ago
    Thanks for the reply. I'll try to look up connections, but for right now it seems to be impossible with Google SERPs including Facebook mentions of Carlyles the world over. That is, search for anything "facebook" on Google and you'll get a million FB pages due to the word "Facebook" in every page title. Sigh, Google.
    - cbr 15y ago
      Why not exclude facebook.com from the results? "facebook carlyle -facebook.com"

kposehn 15y ago

I'm kind of smelling some negative press push here about the IPO. A lot of the stuff doesn't seem to add up - despite supposedly solid leaks about documents, etc. What this might be an indicator of is a dedicated effort to push the stock price post-IPO lower so that various traders/funds can make a nice chunk of change off a rebound post-earnings. I'm fairly skeptical of this sort of conclusion - especially about supposed ad revenue or other issues - due to my personal experience using the platform. I have spent a small fortune (of my own money) on online advertising as an affiliate for several years. Out of all the various ad networks and venues, the most consistently profitable has been Facebook, bar none. On a typical campaign, I'll net a 200-300% profit on my ad spend. Compare this with 60-100% on Google AdWords and 50-65% on Bing. Don't even get me started on buying display ads. I'll spend any free ad budget on FB before any other network, simply because I _know_ I'll profit from it - the risk is far lower and the margin far higher. I guess my point is, like when Google started, people just don't get the power that FB holds when it comes to advertising. Storefronts in FB were never the point - what is far more important is engagement and interest. Facebook is king when it comes to that.

tokenadult 15y ago
I'll spend any free ad budget on FB before any other network, simply because I _know_ I'll profit from it - the risk is far lower and the margin far higher. After reading that, I went to your HN profile, where you write, "Entrepreneur and rabble-rouser with an eye for monetization and innovative business concepts. Tempered by the reality of being an affiliate marketer for 3+ years. Forged in the fire of having to compete tooth and nail to succeed in that industry. Prone to writing silly and/or odd descriptions of himself. Named his company after his cat." I still don't know what industry you are in, but I suppose different businesses in different industries get different results from Facebook ads. I don't know either how Facebook compares to the great majority of places to sell advertisements online, but isn't it possible that your experience is exceptional, and that there aren't enough businesses like yours to sustain a business with the expenses Facebook has?
- kposehn 15y ago
  Good point. I have given a lot of thought to sustainability with Facebook Ads, and my optimism follows the basic data of my experience ever since it opened up. Originally, low CPC's were quite commonplace. I could advertise something and get a pretty good rate - $0.10 or so - and make some really good money. Over time, the base CPC has risen across the world. Right now, you're looking at $1.20 or so just to hit the US untargeted (this isn't the suggested bid, this is actually running all-US ads). What is really telling however is CPC's on very tight interest groups. Let's say I target a set of interests in a city that gets me about ~2k people in the profile. It used to be, even a year ago, that I'd pay about $0.80 per click. Today, you'll be lucky to find $1.30 on the low end. As niches get narrower and people get better at mining interest, the CPC climbs. Long term, sustained CPC trends are clear indicators of increasing demand and the ROI to sustain them. Why this isn't talked about so much has to do with barriers to entry. I'm telling everyone here a lot about what I do without revealing the finer details. Also, I would say that as with any venue, some products do better than others. You can sell big-ticket stuff on FB, you just have to go about it much differently. You can lose a lot of money on Facebook quite easily, so how you approach the market is a big factor. That said, the secrecy surrounding the success FB advertisers like myself are having is a much stronger indicator than anything that is said publicly. Will it keep FB from missing earnings targets? Probably not, but I remain very bullish on where they are going and what they have to offer.

phuff 15y ago

The graph in this article shows revenues continuing to go up over the next 3 years... Just at a slower rate. That doesn't sound like "things don't look good" but more like "things don't look as amazing as they did, but still look pretty good." Of course, I have no idea about the validity of the underlying data in that graph... But still, it totally doesn't match up with the analysis of the numbers presented in the text. Not that I'm a facebook investor or anything... On the contrary... :)

VikingCoder 15y ago
Let me give you a sneak peek into an investor's mind: "Slow, sustainable growth? SELL!"
- orthecreedence 15y ago
  You're thinking of a trader.
  - ohashi 15y ago
    To be fair, even if I were an investor looking at the long term, the time to buy wouldn't be now with a PE that high and expecting slow and steady growth.
tatsuke95 15y ago
When your P/E is greater than 100, people are expecting mad growth in the future. Growth slowing already? That's bad news for people looking at investing.
- scylla 15y ago
  What would you call a P/E ratio over 9500? http://finance.yahoo.com/q?s=CRM http://finance.yahoo.com/q?s=CRM Both the stock and the P/E ratio has been growing for years.
  - tatsuke95 15y ago

AznHisoka 15y ago

FB will always be able to monetize their users. It's just a question of what premium. Since most people on FB have no intent on buying anything, the amount they can net per user is very very small compared to Google. In a sense, it's just like a glorified TribalFusion, where eyeballs are worth .01 each.

seancoughlin 15y ago
This seems right. Users are much less valuable for companies on Facebook b/c of user intent. What Facebook needs to figure out is how to channel higher value users to ads. One fix might be to create a separate search tool that focuses on "stuff" since the main search navigation is useless for finding anything except your friends.

pg 15y ago

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together at least this much about any public company.

ChuckMcM 15y ago
That was my response as well, so they generate a slightly less ginomous net revenue and that is a problem how exactly. Looking at worst case numbers it looks like Facebook will be close to 'accumulating cash' mode at the outset. That is a pretty good thing. Now it would be nice to get some more visibility into their execution against advertising system changes but this reads more like a 'place' piece where the author hopes that if things go good people will forget they ever read it, and if they go really bad he'll be on record early 'predicting' it and will be able to demand huge consulting fees :-) Of course I have no idea behind the motivations of the author, I just wondered how he can look at $5B in revenue and not be "well ok, their model is working at least."
- viscanti 15y ago
  The biggest reason Facebook has a 100 Billion valuation is because people expect ad revenue to grow rapidly. If there are signs that's slowing down now, before they even go public, it has a huge impact on their valuation. 100 Billion is a very generous valuation, even if you expect Facebook to have tremendous growth, it's an outrageous valuation if you expect them to stay the same (or shrink).
  - ChuckMcM 15y ago
    Well if they do manage to do 5B$ revenue this year 100B would be a 20x multiplier on their revenue. Seems in line with other tech companies. But we'll have to wait until they start pushing out those quarterly reports to be sure.
15y ago

mlinsey 15y ago

Doesn't sound too bad at all, frankly. Someone is just trying to add a little drama to what is otherwise a big success story. It is certainly true that usage of Facebook is rapidly shifting towards mobile, and that currently Facebook doesn't have any ads on mobile. That has got to impact revenue growth somewhat. But ads coming to Facebook mobile sometime soon is about as obvious as can be - and I'd bet on them doing it in a way that takes advantage of that platform's strengths and makes their company even stronger.

kposehn 15y ago
Sponsored stories are coming to mobile soon, and from what I can tell actual mobile ads are following on their heels.
tatsuke95 15y ago
>"Someone is just trying to add a little drama to what is otherwise a big success story" It's a fallacy to conflate "success" with "hype". Facebook is going to make money and be successful, barring some unforeseen craziness. They made a billion in net income last year! However, where it seems that the tech world and the investment world diverge is in the expectations. $1BB (or 2,3,4,5) isn't enough to buy in at the anticipated price.

deleted 15y ago

[deleted]

gph 15y ago

It's always amazed me that a company's outlook can look bad even though they're profit/revenue is growing, just because said growth isn't as big as it was in the past. I can sort of see why from an economics perspective, the stock price is based on profit growth projections and if those projections don't hold up the price will naturally drop. But it still seems crazy that we continually expect and pressure our public companies into growing their profit at a rate higher than it was previously growing, otherwise they aren't hitting performance expectations. I'm sure someone with more economics knowledge can explain it in a way that makes sense, but to me that seems like a logical fallacy. We expect what amounts to continual exponential growth. Edit: Typos

veyron 15y ago
The question you have to ask is how they are making money. If it costs 2 dollars to make a dollar in revenue, then you are actually losing money. There's no guarantee that they will continue to make money if they tone down their spend (for example, reducing ad spend), which is why the revenue / profit quality matters.
pron 15y ago
The reason for that is simply that expectations are already factored into the stock price. If expectations aren't met then the stock is overvalued.
lmm 15y ago
See http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/ http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi... , which featured here a month or two ago.

brudgers 15y ago

>"Expect more ads as Facebook tries to meet revenue projections." As I've commented here before, I access Facebook in its own VM. The past couple of days, I have noticed a significant uptick in the number of ads displayed. However, the odds of my clicking one is no higher - just because I accepted a friend request this week from a politically conservative person who I went to high school with decades ago; it doesn't mean I want to buy a USS Ronald Regan hat.

cs702 15y ago

Some advertisers are getting much better results with Facebook ads than with Google AdWords -- for instance, see http://jeffmatthewsisnotmakingthisup.blogspot.com/2012/01/is-facebook-killing-google-no-but.html http://jeffmatthewsisnotmakingthisup.blogspot.com/2012/01/is... (Money quote from that link: "...according to a friend in retailing, the average Facebook woman updates her relationship status to 'Engaged' within two hours of the guy actually proposing…so Facebook sells that relationship status information to retailers who have bridal registries. As my pal told me, 'We’ve been looking for this for fifty years.'")

koalaman 15y ago
http://www.facebook.com/legal/terms http://www.facebook.com/legal/terms "We do not give your content or information to advertisers without your consent."
- cs702 15y ago
  ...which consent most consumers will blindly give by clicking on whatever button they must click to get to their Facebook page... without ever reading such legal terms.
  - cs702 15y ago
    ...which in turns reminds me of this classic incident of regular people trying but unable to login to Facebook: http://ryankuder.posterous.com/facebook-users-think-readwrite-web-blog-is-fa http://ryankuder.posterous.com/facebook-users-think-readwrit... [Update: I'll submit this as a link. It's a classic.]
- ceejayoz 15y ago
  May have just been an inelegantly worded way of saying "we can target people for Facebook ads on this sort of variable". Facebook doesn't have to release the "so-and-so got married" information to the advertiser, they just have to show that demographic the ads.

deleted 15y ago

[deleted]

mckilljoy 15y ago

Facebook's PE ratio is around 100 last time I checked. If a 'good' valuation is in the 10-15 range (e.g. Microsoft, Apple, Google), then either Facebook's profits earned needs to increase by 10x, or it's share price needs to fall by 10x. If Facebook's percentage revenue increase is 'only' double-digits, and shrinking, it will take years and years of earnings growth before it becomes a 'good value'. It will take 5 years at a sustained 60% yearly earnings growth rate to reach the same PE ratio Apple has today.

2pasc 15y ago

I agree with PG that this is "fake news" What few people realize is that Facebook does $3B in revenues while not monetizing two "real estates" that could add $3B each (or more) in the future: - Mobile is still not monetized at all and we are talking about 400M MAU!!!! - Facebook does not leverage the huge breadth of data it has garnered about users through their "like" actions on other publisher's website to create a much need competitor to AdSense. These two opportunities are $B opportunities easily... My only concern for Facebook would be that they focus too much on their short term earnings to justify their very bullish P/E multiple... and lost sight on consumer satisfaction. On the other hand, by doing so (like Google has in the past 4-5 years) would open the door to new startups that could start gaining some great momentum!

adaml_623 15y ago

Anybody who puts a column graph showing billions and overlays a downwards trend in red showing slowing growth is essentially lying. It's irrelevant that they have a point with regards to high P/E ratiom slowing growth and missing targets. Anyone who makes a graph shaped and coloured like that is belittling their readers.

blantonl 15y ago

This is exactly why Facebook should not do an IPO. Regardless of whether or not these rumors are true, hungry public investors will demand significant revenue and profit growth regardless of long term plans and prospects. I'm afraid that this IPO is going to be a mess. This might be where we see Zuckerburg get in over his head.

runn1ng 15y ago

"predicting Facebook's advertising revenue growth will slow" They are talking about second derivation here, right?

programminggeek 15y ago

Things look amazing for FB. Seriously. So many opportunities for growth. Imagine FB credits at local merchants... Imagine FB Social Ads for content publishers... Imagine FB running their own mobile ad network... Sure, FB is kind of AOL all over again, but this time around FB (unlike AOL) has no intentions of cashing out to some media conglomerate. Facebook is more like this decade's Google like Google was last decade's Microsoft.