facebook....I still don't see how they make THAT much money - Striper Talk Striped Bass Fishing, Surfcasting, Boating

Mr. Sandman · 02-02-2012, 04:43 PM

OK, FB is going public. The sums of money they are talking about are mind numbing. I known they have something like 800 million users but I still don't get exactly who is paying them and what exactly they are "selling". OK lets assume they are selling all the info everyone puts on the page. Who is buying it? It cant be worth all that much? DO you care that I have 2 kids, a wife and live in 02539 and like to fish have a boat and studied engineering? I get it that someone might find all this interesting and might want to use it to target me for advertising but it is not worth all that much $. Who is writing these mega checks to FB? It can't be those 5 cheesy ads on the side of the page...no way.

IMO facebook does not need an IPO to expand, they have gobs of cash and are all billionaires. This is all about making the VC's even more rich as they look to receive several billion in the next 90 days. IMO IPO's are used to raise capital to develop companies, not squeeze out more money from the investing public to line their pockets. I don't get it.

I still don't understand their model and how they scaled it to what , that said, I understand google but still, the scale they achieved seems disproportionate with reality.

thefishingfreak · 02-02-2012, 04:50 PM

If Facebook was a country it would be the 3'rd largest on earth right behind China and India.
If you could make a 1/2 penny for every single click, well then...

PRBuzz · 02-02-2012, 05:14 PM

Quote:

Originally Posted by Mr. Sandman

, they have gobs of cash and are all billionaires. This is all about making the VC's even more rich as they look to receive several billion in the next 90 days.

Capitalism at its finest!

BTW they are only on paper billionaires until they IPO, they hold certificates of stock POTENTIALLY WORTH billions that are not yet traded.

The $$$ comes from all those STUPID games people play, all those ads, someone is definitely clicking on them.

Karl F · 02-02-2012, 05:28 PM

http://blogs.forrester.com/fatemeh_k...agement_battle

interesting informative read..
every click is cash..
JohnR does it here with banner ads.. all your info is tracked every time you click a link, anything you "like" on FB or google targets the ads to you..

JohnnySaxatilis · 02-02-2012, 09:00 PM

all we talked about in economics class today. Facebook could bail out greece, lol

PaulS · 02-03-2012, 08:26 AM

read about 1 guy who made some paintings for them and took stock instead of $. Worth an est. $200,000,000 now.

Mr. Sandman · 02-03-2012, 09:06 AM

I must be getting old...I still don't see the mega appeal it has. I guess it is human nature to want to know everything about your friends. Frankly, I really don't care and every time I use facebook ( I have to force myself to use it) I keep asking myself why is this so popular?
I have never clicked or barely noticed these ads. Like? I think I liked a couple things but what is the point of "liking" something?

As for money? They are already billionaires...this IPO is gravy. Honestly I don't think the SEC should allow them to do an IPO, they don't need capital. The purpose of the going public is to raise capital to develop new technologies or expand not to "cash out"

And it just does not add up! if they get 0.05 cents per click and all 800mil click that is 40 mil. , they would need everyone clicking all the time. I still can't see what they are selling and why it is THAT valuable and who is in a position to pay them. It is not 5 cheesy ads on the side, this can not be the primary source of the revenue.

JohnR · 02-03-2012, 09:42 AM

I don't see it either. While it is huge can it be THAT big. The revenue model I just don't see. Google I understood. Red Hat I knew would not be what people claimed. Model wasn't there.

MarshCappa · 02-03-2012, 10:47 AM

We need a "like" button on here.

Swimmer · 02-03-2012, 10:50 AM

Quote:

Originally Posted by Mr. Sandman

I must be getting old...I still don't see the mega appeal it has. I guess it is human nature to want to know everything about your friends. Frankly, I really don't care and every time I use facebook ( I have to force myself to use it) I keep asking myself why is this so popular?
I have never clicked or barely noticed these ads. Like? I think I liked a couple things but what is the point of "liking" something?

As for money? They are already billionaires...this IPO is gravy. Honestly I don't think the SEC should allow them to do an IPO, they don't need capital. The purpose of the going public is to raise capital to develop new technologies or expand not to "cash out"

And it just does not add up! if they get 0.05 cents per click and all 800mil click that is 40 mil. , they would need everyone clicking all the time. I still can't see what they are selling and why it is THAT valuable and who is in a position to pay them. It is not 5 cheesy ads on the side, this can not be the primary source of the revenue.

An aquaintance of mine twenty years ago owned a printing business that mailed out those local business coupons, in envelopes, maybe twenty or so in each mailing. He and other businessmen in the same businesss paid a company to do a survey for them to help them run thier business more efficiently. The survey company found that a person who received those coupons in an envelope at thier house and actually opened them had to read them twelve times before they recognize any one company whose advertised this way, twelve times, and they still thought it was worth it. At least in those envelopes you could feel the pulse of the consumer. As you said I don't know how these companies that advertise on Facebook can do so. And then to have someone put a value to it. Pie in the sky economics. Actually more like pie in outer space economics.

JohnnySaxatilis · 02-03-2012, 11:02 AM

Quote:

Originally Posted by Mr. Sandman

It is not 5 cheesy ads on the side, this can not be the primary source of the revenue.

See all those Facebook symbols on all the commercials now? See facebook everywhere you go now? Thats what they're selling, their brand name to everyone on tv who wants to buy it and make their show have a facebook app and page and be associated with it; Cell phone companies, tv studious, namely the stongest industries. Because why? Facebook is popular. Say it with me, they have 800million users who log on multiple times a day world wide.Thats whats so valuable. exposure.

zacs · 02-03-2012, 11:11 AM

people pay big bucks to advertise on facebook. more than just cents per click. big lump sums just to get your add up there, featured in front of 800MILLLLLION faces. If even 1% look at it you are talking about 8 Million people. that is more exposure than almost any other media outlet.

And Sandman, I don't think that in your example, 800M x 1 click x .05 = 40M is how it works. Here is how I view the reality probably is:

Of the 800M users, lets say 20% are "daily users." thats 160M. and lets say of those, 1/2 of them are heavy users. So you have 80M people that are on facebook, on and off, all day. If each one of these people makes 10 clicks per day at $0.01 per click, you are talking about $8M per day of clicked revenue, or $2.9B.

And that is just clicked revenue. Then they have people paying them big money to place adds. Lump sums + clicks. They have people buying data & lists. They made 500M last year selling these stupid 'items' inside their games. Stupid to you and me, but dumb kids are forking it over. And I would assume that with all this money they are re-investing to try to find even more ways to diversify their revenue streams.

Like it or not, the money is there. Will it last for ever? Who knows. Technology trends move SO FAST, if you don't move with it, you are toast. Look at Blackberry. But as we stand today there is no more effective way to reach more people than facebook. not TV, not Print, nothing.

JohnnyD · 02-03-2012, 11:19 AM

To those saying they don't see how Facebook can be so valuable or why advertisers would pay money to advertise on there... there are entire industries that revolve around buying ad-space on Facebook in order to generate leads for selling a product. I know two people in particular that have a team of people advertising products on Facebook. One of them told me that he spends upwards of $2000/day in FB advertising.

Then tack on companies that make games on Facebook and pay royalties. Zynga is an online gaming company that was basically created to design games and generate revenue through FB. They now have a few thousand employees and are traded on NASDAQ.

Facebook is now an industry in and of itself.

How do you guys think Google got so big? It is 100% thanks to their advertising model.

BigBo · 02-03-2012, 11:44 AM

Talk about sickening. This makes me want to puke.

Bono Facebook IPO Shares: Will U2 Frontman Pay Tax on Facebook IPO Windfall? - International Business Times

JohnR · 02-03-2012, 12:27 PM

Quote:

Originally Posted by JohnnyD

To those saying they don't see how Facebook can be so valuable or why advertisers would pay money to advertise on there... there are entire industries that revolve around buying ad-space on Facebook in order to generate leads for selling a product. I know two people in particular that have a team of people advertising products on Facebook. One of them told me that he spends upwards of $2000/day in FB advertising.

Then tack on companies that make games on Facebook and pay royalties. Zynga is an online gaming company that was basically created to design games and generate revenue through FB. They now have a few thousand employees and are traded on NASDAQ.

Facebook is now an industry in and of itself.

How do you guys think Google got so big? It is 100% thanks to their advertising model.

I understand that - but they are not Google

fishbones · 02-03-2012, 12:59 PM

I like redtube better than facebook.

Rockport24 · 02-03-2012, 01:03 PM

We talk about this a lot in business school. I agree with a lot of what has been said here in terms of the many revenue streams and how the money is basically there, but John has a point, they are not google and we as the public have yet to see the huge earnings numbers that google puts up out of them.
I think FB has ridden a wave of "elite" investor speculation that has drastically inflated the share prices.

I had a class where some VC guys came in and spoke, and they basically said that in most cases, VCs will invest and base valuations on on potential revenue streams and not actual onces. If you wait for the money to be there, you will be too late to the party. So basically, it all remains to be seen, but everybody is betting that this will be seen and they will be bigger than Google.

Mr. Sandman · 02-03-2012, 01:36 PM

I saw a segment on CNBC and several people read thru the IPO docs where they outline there current streams. Basically they are making $4.05 per subscriber right now. After the IPO they need the number to jump to $120 per current subscriber. Many doubt this is doable and they don't think they can increase the number all that much more as eventually they will reach a top in the number of possible subscribers.

BTW, to me all they do is they provide targeted eyeballs for advertisers. It is worth something but nothing like what they are paying. Way overvalued. This is a possible reason the retail industry is a wreck, advertisement budgets must be insane. For them to be making this kind of money, someone is writing huge checks....who might the top 10 of these be?

JohnnyD · 02-03-2012, 02:11 PM

Quote:

Originally Posted by JohnR

I understand that - but they are not Google

You're right. But after the IPO, they'll probably be immediately within 10-20% of Google in terms of valuation.

Facebook has something that Google does not - voluntary, detailed demographics of 800 million users. Facebook gives advertisers an ability to segment and target their valued demographic with a sniper's precision.

Advertising dollars are all based on target demographic. That's why there are beer commercials during sports games and commercials for Tampax during Oprah.