FB - Facebook

[rimm_never_sleeps]

the professor gets an "incomplete" from Buffett for even attempting to value fb.

[zarley]

Valuation aside, the parade of share lock-up expirations through the end of the year will probably keep FB down for a while.  I may start looking at it if it's in the mid-low teens in late December (near the tail-end of the lock-up schedule).

Although, with the imbalanced share structure and a management team that seems to resent going/being public and has repeatedly expressed the interest in user experience over profitability, it may not be worth owning at any price.

[valueInv]

I'm going to suggest that Facebook's ad potential is probably higher than the current capabilities of AdSense, which are a huge moneymaker for Google.  Facebook has the technology, data, and reach to push out ads that are better than Google's AdSense ads because they will be user-oriented instead of content-oriented.  My belief is that media sites are far more likely to generate clicks from Facebook driven ads because the content of those sites is generally uncorrelated with "intent".  Like how candied cereal commercials are aired during children's cartoons.  Nothing in the context of a cartoon indicates that Froot Loops should be advertised (unless the cartoon stars an enthusiastic toucan), but everyone knows that it's a really good idea.

Now I have noticed that many AdSense ads are starting to "follow me around".  e.g. I was evaluating some software and for the next there days I kept seeing banner ads for that software, even here on CoBF.  Pretty cool.  A little creepy but I have accepted it as a fact of the future. 

No position in Facebook but I love when a stock gets hammered for this reason.  I might dip my toe in if it gets really ugly.

That's pretty much what I think too. Facebook ads will be closer to Adsense than search ads. While Google uses content on the site where you are plus cookies and google profiles to target those ads, Facebook will use its profile info + social graph + cookies from facebook connect and syndicated like buttons.

But IMO, ceteris paribus, both those types of ads provide less value to the user and advertiser than search ads (or adsense ads on more obviously commercial/niche websites, which can attract more 'primed' potential buyers). I never said facebook can't make money or that its ads don't have value, just that they're harder to monetize, in the same way that CTR and conversion on adsense must be lower than on search ads. Facebook has ginormous reach, so they'll obviously make lots of money even if they get less per ad, but how much money that will be, how fast income will grow, and how satisfied its customers will be from their ad buys remains to be seen.

http://techcrunch.com/2012/08/30/party-like-its-1990-some-ctrs-on-facebook-sponsored-results-ads-exceeding-3/

[Shane]

I find the focus on user experience vs profitability a big draw actually.  If FB loses their user base they won't be able to add much value, so in my mind that is the moat and they must do everything to protect it... I don't see anything wrong with sacrificing short term profits to keep their position strong.

[Olmsted]

An interesting opinion article about the quality of Facebook network connections vs. Twitter network connections:

http://onescotchthreecubes.tumblr.com/post/30841255782/why-twitter-won

[valueInv]

I'm going to suggest that Facebook's ad potential is probably higher than the current capabilities of AdSense, which are a huge moneymaker for Google.  Facebook has the technology, data, and reach to push out ads that are better than Google's AdSense ads because they will be user-oriented instead of content-oriented.  My belief is that media sites are far more likely to generate clicks from Facebook driven ads because the content of those sites is generally uncorrelated with "intent".  Like how candied cereal commercials are aired during children's cartoons.  Nothing in the context of a cartoon indicates that Froot Loops should be advertised (unless the cartoon stars an enthusiastic toucan), but everyone knows that it's a really good idea.

Now I have noticed that many AdSense ads are starting to "follow me around".  e.g. I was evaluating some software and for the next there days I kept seeing banner ads for that software, even here on CoBF.  Pretty cool.  A little creepy but I have accepted it as a fact of the future. 

No position in Facebook but I love when a stock gets hammered for this reason.  I might dip my toe in if it gets really ugly.

That's pretty much what I think too. Facebook ads will be closer to Adsense than search ads. While Google uses content on the site where you are plus cookies and google profiles to target those ads, Facebook will use its profile info + social graph + cookies from facebook connect and syndicated like buttons.

But IMO, ceteris paribus, both those types of ads provide less value to the user and advertiser than search ads (or adsense ads on more obviously commercial/niche websites, which can attract more 'primed' potential buyers). I never said facebook can't make money or that its ads don't have value, just that they're harder to monetize, in the same way that CTR and conversion on adsense must be lower than on search ads. Facebook has ginormous reach, so they'll obviously make lots of money even if they get less per ad, but how much money that will be, how fast income will grow, and how satisfied its customers will be from their ad buys remains to be seen.

Some new data:

http://techcrunch.com/2012/09/13/facebook-exchange-results/

If you remember from the Google thread, I have long maintained that FB is going to put pressure on Google's ad rates and its growth once it goes IPO and ramps up monetization. I have argued that Google does not have the moat that people think it has.

Well, we are just beginning to test my hypothesis. The next two years will tell if I am right.

[moore_capital54]

I'm going to suggest that Facebook's ad potential is probably higher than the current capabilities of AdSense, which are a huge moneymaker for Google.  Facebook has the technology, data, and reach to push out ads that are better than Google's AdSense ads because they will be user-oriented instead of content-oriented.  My belief is that media sites are far more likely to generate clicks from Facebook driven ads because the content of those sites is generally uncorrelated with "intent".  Like how candied cereal commercials are aired during children's cartoons.  Nothing in the context of a cartoon indicates that Froot Loops should be advertised (unless the cartoon stars an enthusiastic toucan), but everyone knows that it's a really good idea.

Now I have noticed that many AdSense ads are starting to "follow me around".  e.g. I was evaluating some software and for the next there days I kept seeing banner ads for that software, even here on CoBF.  Pretty cool.  A little creepy but I have accepted it as a fact of the future. 

No position in Facebook but I love when a stock gets hammered for this reason.  I might dip my toe in if it gets really ugly.

That's pretty much what I think too. Facebook ads will be closer to Adsense than search ads. While Google uses content on the site where you are plus cookies and google profiles to target those ads, Facebook will use its profile info + social graph + cookies from facebook connect and syndicated like buttons.

But IMO, ceteris paribus, both those types of ads provide less value to the user and advertiser than search ads (or adsense ads on more obviously commercial/niche websites, which can attract more 'primed' potential buyers). I never said facebook can't make money or that its ads don't have value, just that they're harder to monetize, in the same way that CTR and conversion on adsense must be lower than on search ads. Facebook has ginormous reach, so they'll obviously make lots of money even if they get less per ad, but how much money that will be, how fast income will grow, and how satisfied its customers will be from their ad buys remains to be seen.

Some new data:

http://techcrunch.com/2012/09/13/facebook-exchange-results/

If you remember from the Google thread, I have long maintained that FB is going to put pressure on Google's ad rates and its growth once it goes IPO and ramps up monetization. I have argued that Google does not have the moat that people think it has.

Well, we are just beginning to test my hypothesis. The next two years will tell if I am right.

I will gladly take the other side of that bet. Being short these frothy social networks has been a saving grace for us this year and has contributed over 12% of our net gain this year. As I said before on this board people don't go on facebook to be served with ads. They go on google to find stuff and quench their knowledge hence ads are relevant and are served to a targeted audience. I am surprised no analysts have mentioned this. People go on facebook to self promote themselves or see what other people are doing with their life.

No matter how efficient this new facebook gimmick is the ad market for facebook will always be much smaller due to the dynamics of the facebook userbase. They are simply disinterested in being served with ads when they are on facebook.

[valueInv]

As I said before on this board people don't go on facebook to be served with ads. They go on google to find stuff and quench their knowledge hence ads are relevant and are served to a targeted audience. I am surprised no analysts have mentioned this. People go on facebook to self promote themselves or see what other people are doing with their life.

No matter how efficient this new facebook gimmick is the ad market for facebook will always be much smaller due to the dynamics of the facebook userbase. They are simply disinterested in being served with ads when they are on facebook.

I would love to see your research on FB user behavior if you guys are willing to share.

 Also, how do you explain the results of the pilot?

[DCG]

As I said before on this board people don't go on facebook to be served with ads. They go on google to find stuff and quench their knowledge hence ads are relevant and are served to a targeted audience. I am surprised no analysts have mentioned this. People go on facebook to self promote themselves or see what other people are doing with their life.

What you're not taking into account is the potential for Facebook to greatly increase it's Search functionality and stealing a large amount of traffic away from Google.

[LC]

As I said before on this board people don't go on facebook to be served with ads. They go on google to find stuff and quench their knowledge hence ads are relevant and are served to a targeted audience. I am surprised no analysts have mentioned this. People go on facebook to self promote themselves or see what other people are doing with their life.

What you're not taking into account is the potential for Facebook to greatly increase it's Search functionality and stealing a large amount of traffic away from Google.

Yes but that is unproven potential which is simply conjecture at this point.

Has facebook WOWed you with their search function, ever?