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Facebook Does Dr. Evil Impression

TUESDAY MARCH 28 2006 11:02 AM

Submitted by WilWheaton. Edited By WilWheaton.

Apparently the owners of Facebook all bought Deloreans and raced back to 1996. They've announced that they will only sell Facebook for two BILLION dollars.

The owners of the privately held company have turned down a $750 million offer and hope to fetch as much as $2 billion in a sale, senior industry executives familiar with the matter say.

That may sound like a huge amount of money, especially when you consider that the company was launched just two years ago by a group of sophomores at Harvard University . . . But already, www.facebook.com has become the seventh-most heavily trafficked site on the Internet, according to market researcher comScore Media Metrix. It racked up 5.5 billion page views during the month of February.

What the hell? How do you turn down $750 million? Do they think they're on Deal / No Deal?!

Business Week suggests that Viacom (owner of MTV, VH1, Comedy Central, and Spike TV among others) may be looking to buy Facebook as a cock-blocking move against NewsCorp's acquisition of MySpace, which was bought for $850 million last year.

The question here is how investors hope to make their money back. Though sites like MySpace and Facebook have massive amounts of traffic, are their users really looking at advertising? Jason Calacanis weighed in on this last week:

The big problem with social networks is the business model. It is clear that users are not willing to pay for social networking sites like MySpace, Facebook, and Friendster. If any of these sites started charging they would be replaced with a free option. That leaves advertising as the business model.

However, when people are on social networks they have two choices:

1. Interact with people: flirt, find a date, find a mate, hook up, make friends, etc.
2. Click on advertisements.

Very few advertisers are going to be able to beat out the desire for people to hook up--unless of course they have a better way to hook people up with other people. For example an advertisement on MySpace for Match.com that says "meet people in your zip code" might actually convert well since folks are in the "hook up" mindset.

[. . .]

This takes nothing away from social networks and their amazing traffic. However, the fact is social networking is a bust for advertisers today. We've seen this before with chat rooms, listsrvs, message boards, and email clients. They are amazing for traffic, and they are horrible for advertising.

If social networks are going to work for marketers they are going to have to nuke the current model for advertising and do something much more creative.... creative enough to trump the value of hooking up.

Love him or hate him (Jason is a friend of mine, so I fall into "like him,") Jason is a very smart, savvy guy and knows what he's talking about. Companies would be wise to listen to him.

There's also the fact that most of the damn kids today use adblock or other advertising-blocking tools, so they never see the ads in the first place. (Aside to the web-advertising industry: see what happened when you went and made your ads intrusive? With your pop-ups and pop-unders, and your web bugs and your siezure-inducing animated banners, you made us all find ways to tune you out. If you'd just stayed normal and mellow and earned our attention, rather than trying to forcefully grab it away from whatever we went to the website to read in the first place, you wouldn't have this problem.)

So will Facebook sell for two billion dollars? As Asia said, only time will tell. But if it does, I suspect that Nelson Muntz will be warming up the mother of all "HA HA!"s in about a year.

(via Techdirt)

13 Comments

StarBelliedBoy

Philadelphia, PA

December 2003

MAR 28, 2006 11:11 AM

Doubt it, Myspace has way more features, and I could be mistaken, but I'm pretty sure it's got a higher userbase. So why should Facebook get more than double what Myspace got?

Landed

I'm lost

March 2006

MAR 28, 2006 11:13 AM

Too slow, Crusher!

StarBelliedBoy

Philadelphia, PA

December 2003

MAR 28, 2006 11:18 AM

Landed said:
Too slow, Crusher!

I don't know, I think this one added a lot to the story that wasn't present in the other thread.

Landed

I'm lost

March 2006

MAR 28, 2006 11:25 AM

Agreed. But, I still got it in there 40 minutes before the "official" story went up. I guess that counts for something, right?

OK, it doesn't. I just wanted to call Wil Wheaton "Crusher".

mat8drb

United Kingdom

October 2004

MAR 28, 2006 11:25 AM

What StarBelliedBoy said ^^^^

Hell, $2 billion? Are we aiming for the second dot com bubble then bust? I hadn't even thought that you'd be so engrossed in the site that you wouldn't notice the advertising.

PointBlank

New York, NY

November 2004

MAR 28, 2006 11:33 AM

One Point: The owners of Facebook have never "announced that they will only sell. . .for 2 billion dollars," despite what this article says.

The only one saying that is a "senior industry exectutive" or two.

A second point: MySpace was sold for 580 million, not 850 million.

[Edited on Mar 28, 2006 by PointBlank]

alpha_hazard

Fort Collins, CO

April 2004

MAR 28, 2006 11:43 AM

Myspace is, according to the you tube video from a recent microsoft press conference, the 2nd most frequented site on the internet (apparently Google is behind them...Yahoo must still be first)

According to the flyer I read about facebook safety, it's number 11...certainly SG is 10, right?

Telltale

USA

May 2004

MAR 28, 2006 11:43 AM

Landed said:
Agreed. But, I still got it in there 40 minutes before the "official" story went up. I guess that counts for something, right?

OK, it doesn't. I just wanted to call Wil Wheaton "Crusher".

Haha, I laughed for like 2 minutes at this. I'm just surprised I haven't heard a "Crusher" comment before this one!

As for the article:

(Aside to the web-advertising industry: see what happened when you went and made your ads intrusive? With your pop-ups and pop-unders, and your web bugs and your siezure-inducing animated banners, you made us all find ways to tune you out. If you'd just stayed normal and mellow and earned our attention, rather than trying to forcefully grab it away from whatever we went to the website to read in the first place, you wouldn't have this problem.)

Best... aside... EVER.

I have been seeing some "viral" advertisement in Myspace, but it's once again terrible crap where it's pretty much people going "My friend wants to hook up with you, CLICK HERE to check it out, lol" which makes me want to kick the universe in the face. I don't know what advertisers can do differently to get to social networkers, but I do agree they have to try something other than bugging the crap out of us. To be perfectly honest, I would be content with these companies just making enough to pay the bills and maybe add some bandwidth and special features, while keeping out all the sleazy advertisers trying to brainwash the people on these sites. Social networkers, unite!

Shalome

MODERATOR

Los Angeles, CA

MAR 28, 2006 11:45 AM

alpha_hazard said:
Myspace is, according to the you tube video from a recent microsoft press conference, the 2nd most frequented site on the internet (apparently Google is behind them...Yahoo must still be first)

According to the flyer I read about facebook safety, it's number 11...certainly SG is 10, right?

http://www.alexa.com/data/details/?url=suicidegirls.com

malkav11

Saint Paul, MN

July 2003

MAR 28, 2006 06:59 PM

I think probably the best example of web advertising done right is Penny Arcade. There's a couple of unobtrusive, highly targeted banner ads with minimal animation. They're selected specifically by the folks who run the site as being things their readers would probably find interesting. (They're right, too. I've found things that way that I'm not sure I would have otherwise. And bought at least one thing advertised there and possibly more than that, I forget. And I picked my current ISP after clicking through from there.)

They make enough money off that advertising to support themselves and buy hugely overpriced gaming systems to boot.

I_Poop_Too_Much

I'm lost

February 2004

MAR 29, 2006 12:50 AM

malkav11 said:
I think probably the best example of web advertising done right is Penny Arcade. There's a couple of unobtrusive, highly targeted banner ads with minimal animation. They're selected specifically by the folks who run the site as being things their readers would probably find interesting. (They're right, too. I've found things that way that I'm not sure I would have otherwise. And bought at least one thing advertised there and possibly more than that, I forget. And I picked my current ISP after clicking through from there.)

Ditto and such.

AceT

Portland, OR

April 2004

DEC 25, 2006 05:30 AM

There was a recent story that documents leaked from Yahoo! place the latest bid at $1.6 billion, which was turned down.

There's a bit of a danger to having a 22 year old running a company of this magnitude. Dude thinks he's gonna be the next Google, when probably he's going to be the next Friendster.

ASSH0LE

Las Vegas, NV

June 2003

DEC 25, 2006 02:49 PM

Yeah, I think he's probably missed the boat.

And while I've never been to the site, I'm in agreement with the poster above who mentioned the lack of a functional business model for that type of site.

When I'm a MySpace, I'm in theory catching on to new bands that are using the site to push their music on me. That's workable as an angle, provided they actually pay the site for this marketing capability.

However, when i've gone to that there reunion site (the other one, the larger one, the one that hasnt' got a terribly memorable name) I simply get frustrated at the levels of functionality that have gotten stripped away from it. And at the ridiculous amount of money they want for a site I might be inclined to use once or twice a year, at best.