Facebook close to surpassing Google in visits

On Wednesday, Facebook CEO and founder Mark Zuckerberg introduced a new application called Facebook Places that allows users to document places that they have been.  Cool.  It should be a popular feature on the world's most popular social media site.

Pardon, not just social media.  Facebook is poised to becoming the most popular place on the world wide web, period.

For the month of July, Google had 3.161 billion visits.  Check this, Facebook had an astonishing 3.152 billion visits.  eMarketer estimates that the popular social networking site will rake in over $1.3 billion in revenue for 2010, almost double the $665 million it brought in last year.

The site's staggering growth is fueling speculations that Facebook will go public by way of an IPO sometime in 2012.  That's speculation, but the site has institutional investors.  One thing we know about investors, the final objective is harvest.

Bloomberg recently valued Facebook at $24.9 billion, using data from two private exchanges where investors can place positions in venture-backed companies.

The site has become a global phenomenon, and earlier this year, it surpassed the 500 million user mark.  A big chunk of the world's population uses the site as a place to connect.

There are also expectations of $1.8 billion in revenue for 2011, based on estimates of between 600 to 700 million users.

Facebook is not just a popular online site.  It's staggering growth makes it a bona fide powerhouse.  An interesting question is, will Mark Zuckerberg keep user's experience as a friendly and homely one?

Or will pressures to monetize this most valuable of web properties commercialize the site to such an extent, that friendlier, homelier competitors can snatch the initiative?

Is Facebook's Social Search Engine a Google Killer?

Image by libraryman via Flickr

Its new Open Graph protocol, an extension of its Facebook Connect, is a clear challenge to Google but may not prove useful for many Web searches

When Facebook launched its Open Graph protocol in April, blanketing the Web with "like" and "recommend" buttons, it seemed obvious that one of the company's goals was to use the resulting behavioral data to power a social search engine—one based on likes instead of links.That process is now well under way, as a report at AllFacebook notes. The company has confirmed that all Web pages that use the network's open graph plug-ins show up in the social network's search results in the same way traditional Facebook pages do, as described by Chief Executive Mark Zuckerberg in his keynote at the F8 conference.

Facebook hasn't said exactly how many websites have implemented the Open Graph API and plug-ins since it launched the new platform (a week after the launch, it said there were 50,000), but the protocol was an extension of the company's existing Facebook Connect service, which enabled publishers to integrate features from the site into their pages, including allowing users to log in with their Facebook credentials. According to the company, more than 1 million websites—including some highly trafficked sites, such as The Huffington Post—have integrated its features, and 150 million of the network's more than 400 million users "engage with Facebook" in some way through external sites every month. So will Facebook's social search engine be a Google (GOOG) killer?

Warning Shot

The network's move to harness the power of its Open Graph protocol is clearly a shot across Google's bow, but it's not clear whether the power of the "like" is equivalent to or greater than the power of the link. As Liz noted in a GigaOM Pro report (subscription required), knowing what our friends or Facebook users in general have recommended is useful in some cases—when looking for a hotel or restaurant, for example—but might be less useful in other cases.There's no question, however, that the Open Graph data Facebook is collecting could become a real alternative to a simple Google search for some users. Being able to search for recommendations from close to half a billion users could be quite powerful.

Meanwhile, the search giant hasn't made much progress in incorporating social elements into its own search engine, apart from integrating Twitter results—although since Facebook's Open Graph protocol is theoretically an open standard, there is potential for Google to use that to pull in the network's results in the same way it uses Twitter's API.Microsoft's Bing will likely have a leg up in that department, however, because it runs the Facebook search engine, under the terms of a deal signed in 2008.Facebook search grew 48 percent in March over the previous month, according to comScore rankings. That gave the network a relatively puny 2.7 percent share of the U.S. search business, but still put it ahead of AOL (AOL).

By Mathew Ingram

How Can Facebook Crack its Advertising Problem?

Image by israelavila via Flickr
Why can’t Facebook monetize those users? New York Times writer Randall Stross recently wrote a piece about Proctor & Gamble’s foray into social networking advertising. The thrust of the story can be found in a quote from Seth Goldstein of SocialMedia Networks:

“Advertisers distract users; users ignore advertisers; advertisers distract better; users ignore better.”

Few people take the number of fans a company has on Facebook to be a serious indicator of social media advertising success. And as 24/7 Wall Street notes, advertising on social networks is simply not as relevant as search engine advertisements. Couple this with user blindness and you understand why click through rates are, well, abysmal.
So what are Facebook and the other social networks to do? How do you monetize those 130 million pairs of eyeballs in a consistent and long-term way?

Why consumers click

First, we have to understand that there are two major reasons consumers click on online ads:
Either consumers knows it is an ad and see it’s what they want, so they click - OR -
consumers don’t know it’s an ad and see it’s relevant, so they click.
The first scenario is targeted and relevant advertising. The second scenario is what I call “Internet Ignorant.” Essentially people don’t realize that when they search for Ford Ranger, the top link in the cake yellow box is an ad. Those of us who are technologically adept deal with this every day and are blind to the ads, but millions of people who use the Internet less frequently click on these types of ads, especially on well designed websites where content surrounds the ads.
Of course, this isn’t exactly why we want people to click on online ads. You’ll get conversions, but not as many as from the first scenario. And the “Internet Ignorant” scenario doesn’t work for Facebook anyway - its user base is Internet savvy, blind to ads, and Facebook isn’t about to throw some floating ads in the middle of our profiles.

What can we learn from Harry Potter?

So how does Facebook get people interested in its advertising? We have to look towards two of the most successful types of advertising around:

• Search Advertising
• Movie Trailers

As discussed earlier, search advertising is lucrative because it’s targeted and relevant to exactly what a person is looking for at the exact right time. So precision targeting is part of the equation.
But what about movie trailers? Why are they part of this puzzle? It’s simple: no other type of advertising is consistently sought after and watched over and over again like a movie trailer. Half the fun of a movie is the trailers themselves. Come on - how many times did you watch the trailer for The Dark Knight? And are you seriously not going to watch the next trailer for Harry Potter and the Half-Blood Prince? Movie trailers are extraordinarily interesting, visually appealing, and are often advertising a product that has already sold us, especially as it approaches the launch date.

Translating this into something that works

So am I suggesting that Facebook throw up video ads for The Day the Earth Stood Still? No, though they might actually get a lot of views with some sort of relevant video ad. No, here’s what I’m saying:

1) Relevancy is not enough in advertising. It’s about relevancy and timing. You must catch a person at the moment he or she most desires a product. Lucky for Facebook, they have status updates, which is a close approximation to what people are thinking about at a given moment. Advertising on social networks should focus on time-based actions and then factor in relevant interests (i.e. favorite music), based on when the consumer last added it to his or her profile. This is part of why I believe Twitter could be lucrative - it is nothing but time-based updates. Plus SMS advertising does pretty well, if Twitter so chooses to include it.
2) Facebook must find ways to convince users to seek advertising. Damn, I must be nuts, especially with the advertising blindness of the Facebook generation, but the best advertisements are simple in message, easy to remember, and desired by consumers. Almost all movie trailers and some select TV ads continue to rack up YouTube views. This only helps to enforce branding and slowly change the mindset of the consumer.

These lessons are not just for Facebook or social networks, but for all websites struggling to monetize their users (i.e. YouTube). It’s time to dramatically rethink how we serve and interact with our online advertising. Facebook and other social media websites need to be proactive in shaping the campaigns of their advertisers. Banner ads aren’t engaging or relevant. Text ads are only sometimes relevant and rarely engaging, so how do you target them better? Video ads can be both, but how do you serve them unobtrusively but still get enough views to be profitable? And how do you get enough inventory?
Relevancy, timing, and desire must all be present if social media advertising is to ever succeed. As I’m sure Goldstein already knows, you can’t distract users online and expect to make revenue. You have to make them want it.
Now while I rack my brain some more on this puzzle, I hope you’ll post some of your theories in the comments.
December 15, 2008 - 4:07 pm PDT - by Ben Parr

When Twitter Met Facebook: The Acquisition Deal That Fail-Whaled

Image by via CrunchBase[Updated with new details about deal, including who worked on it and info on a cash component.]
About three weeks ago, Facebook and Twitter ended several weeks of serious talks, in which Facebook was offering to acquire Twitter for $500 million of its stock, which also included a cash component.
While rumors of Facebook’s interest were brought up in an interview with Facebook CEO Mark Zuckerberg at the Web 2.0 Summit a few weeks ago, some shot down the idea as silly.
Quite incorrectly, as it turns out, since top execs at both Facebook and Twitter were right then at the tail end of discussions, which were initiated by the privately held Facebook in mid-October, about bringing the two together.
Those talks, sources on both sides said, are now over.
So why did the deal break down?
Well, as is usually the case, over price–was $500 million worth of Facebook stock actually worth $500 million?–and the typical concerns about integration and costs.
But, more important, it seems, was a feeling among Twitter investors and execs that the start-up should still take a shot at building its revenues–there are none right now–as well as it had done at building its growth.

“It’s more about timing,” said one person familiar with Twitter’s motivations. “There is a strong feeling that there is still an opportunity–even with the economic downturn–to blow this thing out.”
Still, combining the world’s fastest-growing social-networking site with what is quickly becoming the best-known microblogging service is actually a natural fit.
That’s especially true given that Facebook–for all its powerful online social connections–has seen Twitter race past it in innovating in the “status update” arena.
While some sources at Facebook said Zuckerberg was becoming frustrated by the buzz Twitter was getting–a market that should have been dominated by Facebook–others at the company said he was interested in buying Twitter because of his respect for its progress.

Indeed, at the Web 2.0 interview, Zuckerberg called Twitter an “elegant model” and said that he was “really impressed by what they’ve done.”
Indeed, with about six million registrations, as reported in October, up 600 percent over the last year, the San Francisco-based Twitter–launched in 2006–has had impressive growth.
(It has also been plagued by technical issues, which are–to be fair–decreasing.)
In any case, for those not familiar with it, the premise of Twitter is dead simple: A registered user logs in via the Internet or a mobile phone and answers the “What are you doing?” question the service asks in only 140 characters or fewer.
It’s quite a clever idea, although–so far–not a money-making one.
To try to goose that, Twitter’s board replaced the engineer who created Twitter, Jack Dorsey, with another founder, Evan Williams, who had served as its chairman and chief product officer.

The more experienced Williams (pictured here) had already built one company–Pyra Labs, which created the Blogger blogging service–that he sold to Google in 2003. He also started the audio and video search site Odeo, where Twitter was actually born.
Still, its investors have not come down on Twitter to hold back its growth efforts, and have handed over $20 million to the start-up so far. In its last round, Twitter was valued at $98 million.
Its funders include: Union Square Ventures, Charles River Ventures, Digital Garage, Spark Capital and Bezos Expeditions, backed by Amazon Founder and CEO Jeff Bezos.
In addition, well-known Silicon Valley figures, such as Marc Andreessen and Ron Conway, have also invested. Interestingly,Andreessen is also on Facebook’s board.
Other private investors include FeedBurner Co-Founder (and now Googler) Dick Costolo, former Epinions Co-Founder Naval Ravikant and former Googler Chris Sacca.
Twitter needs all the investors it can get, since it has no revenue, although it has been exploring things like charging business customers and adding advertising into the consumer service.
Lack of revenues was an issue for Facebook, said sources, especially related to fees Twitter pays for delivery of its messages to cellphones.
While the issue has been manageable in the U.S., Twitter cut off its SMS support in some international markets this summer because of too-high costs.
But, if Twitter was offered to Facebook’s 120 million users, Facebook execs estimated that it might have to deal with huge SMS fees–up to $75 million annually.
“Facebook has its own revenue-generating challenges,” said one person close to the company. “As much as Twitter would give them a lift in the status area, it was still a worry.”
Not enough, said several sources, to stop Facebook from making another approach at some point in the future. “We’d hate to see Twitter go to another company,” said one source.
Indeed, while all are even more price-conscious than Facebook, large companies that could also be interested include: Google (GOOG), Yahoo (YHOO), Microsoft (MSFT) or a large telecom company, such as Verizon (VZ).
If it had completed the deal to buy Twitter, it would have been Facebook’s most significant acquisition by far.
Zuckerberg and Williams did meet and get along well, but the deal was primarily negotiated by Spark Capital partner Bijan Sabet (Spark is a Twitter investor) and Facebook deal guy Dan Rose.
But in this time, at least, the Twitter side was still not interested in selling at the price Facebook had offered.

The $500 million offered was in an all-stock form, said sources on both sides, at the $15 billion valuation that came from the Microsoft’s investment in the company last October.
The Twitter side felt that figure was inflated and the shares should be valued at the lower figures that have also been reported for Facebook’s true valuation, more in the $5 billion range.
That would have given the deal a $150 million price tag, which was seen as too low, especially since it was in Facebook stock and not cash initially.
In fact, Twitter wanted cash, which some sources say was offered by Facebook in the $50 to $100 million range, in addition to stock, but taking too much stock was still a major issue.
There are other ways the pair could have approximated a safer choice for Twitter, via warrants, of course, or other methods.
But, said several sources close to Twitter, the primary reason for not selling was because its board simply did not want to yet or perhaps ever.
Said one source: “The question is, is it really a good idea to sell on the first chance you get?”
Well, for Twitter, we’ll just have to wait and see about that, of course.
[Photo of Evan Williams by Joi Ito. Licensed under Creative Commons 2.0 By-Attribution license.]

Facebook Trying To Acquire Twitter Is Setup For Failure

By Brian Solis - Mon, 11/24/2008 - 2:53pm.





Kara Swisher has written a tremendous post on Facebook's quiet attempt at acquiring Twitter. It inspired me to share my thoughts on the subject.
During the Web 2.0 Summit, John Batelle interviewed Facebook Founder Mark Zuckerberg, and if you listened closely enough, it was clear that Batelle was prodding Zuckerberg to validate the rumors that Facebook was exploring the possibility of acquiring Twitter.
With a teasing smile, Zuckerberg described Twitter an “elegant model” and professed that he was “ impressed by what they’ve done.”
Following the session, attendees poured into the hallways dissecting the dialogue to support or discount the prospect of such a bold acquisition.
Kara Swisher has confirmed the rumors, however, an acquisition is not imminent - at least not yet.
For the record, I had heard the rumors and was pretty confident that the discussions were taking place. What I couldn't fathom was how Facebook would leverage Twitter's unique model and culture as its community is radically more liberal and protective than that of Facebook. And, with Facebook Connect looming, it seems that Twitter, which is already appearing as an opt-in service in the Facebook News Feed, is only one of the many distributed communities that can collectively position Facebook as your central dashboard for managing the relationships that define your social graph and the information, content, and insight that defines, strengthens, and elevates it.

Mark Zuckerberg at F8 announcing Facebook Connect
For those who aren't yet familiar with Facebook Connect, it is a technical bridge that links your Facebook profile with other online identities and associated activity back to Facebook. It enables seamless integration between Web sites, pages, communities, and networks and the Facebook identity system. For example, if you’re commenting on a blog hosted on the Moveable Type platform, you can now login with your Facebook details and not only will your comment and link to your Facebook profile appear on the blog, the activity of commenting is also linked back into your activity feed for your friends and colleagues to see. Digg will also allow Diggers to log on using their centralized Facebook ID and for each story they digg, the activity is documented back on their profile. Facebook Connect partners already number in the hundreds.
Did I mention that Twitter is one of the original Facebook Connect partners?

Twitter has grown by over 600% in one year. From a business perspective, I can understand why Facebook would consider engaging in negotiations. Twitter is currently reporting six million registered users and last month, the micro community experienced its greatest traffic to date - bolstered by the 2008 Election.
The deal was close to finalization, but (thankfully) fell apart for very valid reasons.
According to Kara Swisher's post, Facebook was attempting to acquire Twitter for $500 million in a pure stock deal based on Facebook's heavily disputed $15 billion valuation. Analysts peg the true estimate of Facebook's market value closer to $5 billion, which would have positioned Twitter's sale price at roughly $150 million - a number that investors, the board, and the company's founders believe is far too low. Just for the record, Twitter's investments total ~$20 million with a valuation of $98 million.
Twitter preferred a cash deal, perhaps with stock, and that's understandable in this market. And there's a pervasive sentiment that the company might just have a successful run at generating revenue while continuing to grow the community and redefine how its users communicate with each other in the process.
From Facebook's perspective, the stock offer was a conservative approach that reflects the business state of Twitter. The company is not only generating $0 revenue, but its basically a substantial cost centert. Among salaries and other expenses with innovating and managing the service, Twitter pays for SMS fees associated with each text-based update. Facebook estimates that this could cost the company upwards of $75 million annually if Twitter was rolled out to its 120 million users.

While this deal might equal a Fail Whale for the moment, it potentially could have equated to a Fail Whale had it closed. I'm not privy to the integration strategies the companies discussed had the acquisition completed, but I can attest to the Twitter pushback that would have immediately surmounted. In simply tweeting Kara's post this morning, I was confronted with an overwhelming sense of relief that the deal fell apart. This isn't to say that Facebook won't eventually acquire Twitter or perhaps one of its eco-dependent services that also enhance and centralize the distributed micromedia experience, something like FriendFeed perhaps.
When Facebook Connect rolls out Web-wide, the terms of any acquisition discussion will dramatically change as personal Facebook News Feeds will only increase in value as they connect disparate services from across the web, your updates and the updates of your friends, to a centralized social dashboard.