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.
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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.
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