April 8, 2011

What is With This Social Media Craze Anyway?

So as most of you who follow my blog know, I do not write much about the social network space at all on my blog. With that being said, I just my start dabbling in writing about some of the aspects that intrigue me about the social networking space, or in some cases astound me.
Take for instance, Facebook (quite a company to start off with I know). Facebook is an amazing story, err, company. There has been a movie about the founder of Facebook, Mark Zuckerberg, he was named Time Magazines Person of the Year in 2010, he has been interviewed on CBS News’s 60 Minutes program several times, and his company has an estimated IPO Valuation of somewhere north of $50 Billion; $50 BILLION!!!! His own personal networth is estimated to be just shy of $14 Billion. Many of us ask why, or more importantly, how?

I ran across some interesting facts and figures from an April 2011 article in Fastcompany. Here is some insight as to where that valuation may be derived from. Given these numbers, would you buy the stock?

Facebook by the Numbers

  • Facebook contains 610,736,920 member profiles. Incidentally, this is approximately one of every eleven people on Planet Earth.
  • Based on page views and users, Facebook is the number 2 site in the U.S., behind Google and ahead of YouTube and Yahoo
  • Every 60 seconds, it is estimated that users:
    • Send 230,000 messages
    • Update 95,000 statuses
    • Write 80,000 wall posts
    • Tag 65,000 photos
    • Share 50,000 links
    • And for all of that, approximately 500,000, yes that is half a million, comments are left every 60 seconds

That’s all well and good you may say, but where is the real value. Well, according to the article, and research I have done on the subject, it is based on the fact that Facebook has pulled in about $1.86 billion in advertising in 2010. That figure is estimated to grow, substantially this year, 118% to be exact, to a staggering $4 billion. So I am beginning to see where the $50 billion valuation is coming from.

On top of that, it is estimated that the virtual goods for sale on the site, like all of the credits you can buy in Maffia Wars, make us an approximate $835 Million market.

Why are those advertisers spending on Facebook? On a given month, the average use creates 90 pieces of content and spends 6 hours, 2minutes, and 59 seconds on the site. This is significant in many ways and explains the huge push for mobile advertisement schemes from the likes of Google and Apple. An overwhelming amount of those 6 hours are spent surfing Facebook on a mobile device.

Hmmm, I wonder how LinkedIn stacks up to these numbers? Sounds like my next blog post.

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