Social Networking In the Black

Facebook Co-founder and CEO Mark Zuckerberg announced on September 15th that the world’s largest social network became “cash-flow positive” in the second quarter, ahead of schedule. Previously, Facebook had said it was targeting profitability “sometime in 2010.”

Facebook Co-founder and CEO Mark Zuckerberg announced on September 15th that the world’s largest social network became “cash-flow positive” in the second quarter, ahead of schedule.  Previously, Facebook had said it was targeting profitability “sometime in 2010.”  The network also announced it crossed the 300 million registered-user milestone.

AdAge observes that the most interesting aspect of this announcement lies in the fact that Facebook itself is still figuring out the right ad model for social networking, beyond low-cost display ads.  Facebook’s other revenue models include virutal gifts and branded pages/groups, and commerce.  With a payments system now in the testing phase, Facebook will continue to evolve its business model to maintain profitability.

It’s tough to predict exactly how Facebook will need to evolve in order to react to the fast-changing social networking landscape, and to users’ behavior and engagement with it. Brands and their agencies can play a role in developing unique tactics for brands to profitably engage with consumers and fans via Facebook, but it will ultimately be up to Facebook to determine how they can profit from connecting brands with registered users.  Perhaps Facebook should invest some of that profit back into Innovation and R&D, in order to better understand how its users are using the network now, and how that might change – and ultimately, how to keep Facebook relevant.

Advertising should be considered just one route.  On a similar note, Twitter announced last week that it would open its doors to advertisers, changing its terms of service for users as a result.

Via AdAge

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