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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FB needs to improve their ad deployment system and ad standards. Too many spam ads make it to my network and I see them 100x in a day. I don’t spend much on FB b/c I don’t want my clients in that mix of bad ads.
September 16th, 2009 at 3:31 pm
Agree. The quality of ads definitely leaves one wanting. But I wonder if that has more to do with who is buying that ad space right now (many of major brands and their media pro’s still tepid), vs. Facebook’s standards (they’re not going to turn back advertisers at this stage). Also feels like some of the more interesting tactics are being done on brand pages/groups, vs. via ads. If I see another side ad for how I can work from home in my city, I will consider using dark tape on my computer screen.
September 16th, 2009 at 4:25 pm
I love Facebook, I really do but anyone who says “cash-flow positive” needs a running kick to the balls.
He’ll thank you later.
F.
September 16th, 2009 at 4:48 pm
is it a coincidence that lately I have, as well as most people i know, been having problems with FB one way or another
September 17th, 2009 at 1:35 am
Social network sites (SNSs) are increasingly attracting the attention of academic and industry researchers intrigued by their affordances and reach
September 18th, 2009 at 2:42 am