Yahoo! have been in talks with Facebook for over a year now and apparently recently got shy at Facebooks $1 billion asking price but as I will explain here Yahoo! have missed out on an absolute bargain.
Facebook have 18 million users, plenty. However MySpace has 100 million + and sold for a mere $580 million to News Corps in 2005. YouTube sold to Google for a reported $1.65 billion in 2006 but it serves over 100 million videos a day and has over 25 million visitors a month. So what makes Facebook so valuable? It gets relatively huge traffic levels but not on par with YouTube or MySpace. Despite now being available to anyone it began life as an exclusive network for students (you needed an educational email to register) and this is still its primary user group.
So wheres the money?
Currently Facebook displays conventional banner advertising on users homepages and selected pages through the site. Adverts are unobtrusive and random in so much as theyre not targeted at any particular user- theyre just served to the entire site on a random basis. Facebook are doing ok out of this arrangement on the basis of the number of page impressions they receive, although...
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