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Readers Blog: STIROLOGY

How Big Do You Want Facebook to Get?

Everyone has seen the movie Social Network, so you know the company’s origins. Facebook now has a bigger share of online traffic than Google, making them #1 on the web.  They collect $2 billion in revenue through advertising. Facebook is flush with confidence and has even more ambitious plans. 

Recently, Facebook announced that it is going to be testing a Groupon inspired service that will provide discount offers. It’s no accident that this comes on the heels of the dizzying earnings and value of Groupon, which recently turned down a $6 billion acquisition offer from Google.  Facebook sees this as a growth opportunity and doesn’t want to be left behind in the race for your eyeballs and your pocketbook.

You know Groupon right? – they make money by selling deals to consumers in the form of discounts or coupons.  They get a commission on each transaction – accounting for their wealth. This revenue source is too lucrative for Facebook to overlook yet, too expensive for them to purchase.

But Facebook isn’t done.  They’re also holding talks with Skype Technologies SA about offering Web video calls to its users.  And there is much more in the works.

Now, the question is, do you want Facebook to be your exclusive online environment?  Well, they are making steps to try to make that happen. 

I’ll tell you that advertisers are wondering – what is the tolerance from Facebook users with regard to advertising and deals?  Click through-rates on the little ads served up on the right side of your Facebook page are generally very low.  Advertisers are concerned that people don’t want the commercial intrusion in their “personal space.”   Facebook learned a lot from watching MySpace implode and they too are tentative about how fast and how far to go.

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