Tuesday, September 18, 2012

Can we expect an Ad Sense from Facebook Inc (NASDAQ:FB)?

Are search and an external ad network going to be the next big things for Facebook Inc(NASDAQ:FB)?

It may be recalled that at the recent public appearance of Facebook founder and Chief Executive, Mark Zuckerberg, in San Francisco he had spoken about entering the search segment in a big way.

A blog post by Chris Dixon carries an interesting excerpt from a research note by Goldman Sachs on it.

The Goldman analyst has listed out three obvious opportunities where Facebook can make more money and capitalise on its existing information base.

One is developing an external ad network (on the lines of Google's Ad Sense). Two, monetising paid search and three, entering China.

Entering China is, of course, everyone's dream including the mighty Apple.

Will FB Rebound After The Recent Slump? Find Out Here

According to Goldman Sachs search is the most interesting of the three options. Facebook already has some elementary search capabilities but it has yet to be developed very cohesively.

And Zuckerberg's comments last week clearly show that the company is planning to monetise this aspect of its activity.

An external ad network is also inevitable. Google is the established leader in the segment and it had built up a humongous base with its Cost per Click (CPC) strategy.

While Google has the first mover advantage and has fined tuned its technology in this area for years, Facebook has the advantage of having a big traffic "that an external ad network might increase their revenues by 2x or more."

In April this year a blog on Web Pro News had pointed out that Facebook's CPCs had risen 28 percent in the first quarter while that of Google had actually seen a decline of 12 percent in the same period. This was at a time when Facebook had still not gone public and its financials were still hidden.

Considering the kind of information that is available with Facebook in terms of personal particulars of its users and Ad Sense kind of a product seems to be the most likely way for it to go.

No comments:

Post a Comment

Privacy Policy | Legal Disclaimer