Facebook monetization study
I publish an analytical study of the Facebook project
The study was prepared by Mikhail Ananievsky ( Embria research team) specifically for the LiveIdea.ru portal.
The Internet is booming, new technologies, standards and concepts for creating Internet resources are constantly emerging. In 2005, they started talking about a qualitative change in the development of the entire Internet as a whole. New ideas and approaches were called “Web 2.0”, its essence lies in positioning the web as a platform. Web 2.0 includes sites using such technologies as ajax, mash-up, web syndication, ideas of tags and tags, as well as Internet resources aimed at socializing, creating communities. In the past few years, a large number of social networks. The largest in the world are myspace.com, facebook.com, xing.com, classmates.com, etc. In RuNet, you can mention such successful projects as classmates ( odnoklassniki.ru ), my circle ( moikrug.ru ), VKontakte ( vkontakte .ru ) and others. Such Internet resources can have an active audience of tens of millions of visitors per month. Moreover, these visitors spend a significant part of their time on these social networks. However, questions arise. Can resources of this type generate income? Are these projects unprofitable? It is worth remembering that the revolution that Google made was not so much the invention of a new type of search, but the discovery of the method of earnings on search engines that did not bring such fantastic profits before. Now, many expect from social networks something similar to the revolution that once made Google
Facebook is currently one of the most promisingly developing social networks on the Internet. Created three years ago by a group of enthusiasts, the project immediately attracted the attention of investors. During these three years, the volume of venture capital investments in the project amounted to about $ 38.5 million. In October 2007, facebook.com was estimated at 15 billion dollars, despite the fact that its income for that year was only 150 million dollars (tons). E. 100 times less).
The purpose of this study is to study the monetization schemes of one of the largest social networks, facebook.com. The history of the project facebook.com is taken to be counted from February 2004, when Mark Zuckerberg (Mark Zuckerberg), along with Dustin Moskovitz (Dustin Moskovitz), Chris Haghes (Chris Hughes), as well as two students at Harvard University, released the first version of this social network. Domain facebook.com, was purchased only in August 2005, for $ 200 thousand from Aboutface Corporation. The project immediately received the support of investors. In the same 2004, one of the founders of PayPal, Peter Thiel, invested 500,000 dollars on facebook.com. Later, in May 2005, venture company Accel Partners invested another $ 13 million in the project. The development of the project after that is proceeding rapidly. In April 2006, facebook.com is already in the top ten among social networks in terms of the number of visitors. In the same year, the project received $ 25 million injections from a number of venturers ( Graylock Partners , Accel Partners, Meritech Capital Partners , Peter Thiel). Total for three years, the volume of venture capital investments amounted to $ 38.5 million.
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Ventures are usually engaged in equity investments in non-traditional (new, and sometimes completely original) companies. On the one hand, venture capital investments are at increased risk, and on the other hand, the likelihood of obtaining extremely high profits increases. Venture financing is a kind of loan to new companies, a long-term loan without obtaining guarantees, but at a higher percentage than with banks. A very characteristic feature of venture financing is the fact that an investor almost never seeks to acquire a controlling stake in a company, which is fundamentally different from a “strategic investor” or a “partner”. The investor assumes mainly financial risk, and such types of risks as technical, market, managerial, price, etc., are shifted to management, which has a controlling stake in the company.
The cost of the project facebook.com and its total revenues are very impressive figures. In October 2007, Microsoft buys a 1.6% stake in Facebook for $ 240 million. Accordingly, the entire project is estimated at $ 15 billion. In December 2007, the head of the Asian telecommunications conglomerate Hutchinson Whampoa, Li Ka-shing, also bought a small stake in facebook.com. According to Dow Jones, Lee paid $ 60 million for a package of just 0.4%. According to a study by the Wall Street Journal (WSJ, issue dated August 23), facebook.com’s revenue for 2007 was projected at about $ 150 million, at a cost of about $ 30 million.
One of the components of the financial success of the project is its attendance and user activity. In November 2007, facebook.com was visited by more than 86 million active users. At the same time, users browse more than 1 billion 785 million pages per month. Half of the traffic comes from English-speaking countries. 28% of users are residents of the United States, 9.7% - of England and only 9.1% - residents of Canada. This is logical, because facebook.com only supports English interface.
Another component of the project’s success is extraordinary monetization mechanisms. Let's look at the main monetization tools of facebook.com. The main source of income is advertising.
Thanks to all these services, the project’s profit is more than covering its costs. Facebook.com's revenue is growing very rapidly: for 2005, $ 10 million was earned, for 2006 - about 50 million, for 2007 it was predicted to be about 150 million. At the same time, monthly income at the beginning of 2007 and at the end differs by more than an order of magnitude.
Russian analogues.
Russian facebook.com can rightly be called vkontakte.ru . Until today, the owners of vkontakte.ru have not attempted to monetize their project. Moreover, its creators have repeatedly stated that there will be no advertising in vkontakte.ru. However, on the basis of a comparative analysis, it is possible to determine the possibilities of monetization of the social network vkontakte.ru. You can also display the approximate amount that can bring these or other services. For example, facebook.com shows that standard advertising accounts for less than 6% of total revenue. If we consider how many times the social network vkontakte.ru is less than facebook.com, then the price of the sponsored group in vkontakte.ru will be relatively small. However, the cost of virtual gifts may well be the same - $ 1. Thus, virtual gifts can be a valuable source of income. You can pay for this opportunity by SMS. Other SMS services are also possible - this market in Russia is fully developed. As an example, you can bring a paid access service to top users, which is widely used in monetizing various online services for dating. Its essence lies in artificially introducing inequality between users, for example, if there are 10 avatars on the main page, then, accordingly, a paid service for displaying your avatar on the main page is introduced (payment is usually taken as the number of impressions). The market (marketplace) on a vkontakte.ru scale can also bring quite decent income. Sponsored groups, virtual gifts and the market can make the social network vkontakte.ru a very profitable project without the use of annoying banner ads. In addition, many innovations of facebook.com in the field of social advertising can be successfully applied in the Russian context. According to the research group Embria , vkontakte.ru on the Russian market can now cost about $ 10-12 million. But in the case of the introduction of monetization mechanisms and an increase in the number of services, and as a result, users are more attached to the project, its price will increase. Western investors can already estimate this project significantly higher.
Sources:
www.comscore.com , www.facebook.com , www.compete.com , www.alexa.com , www.emarketer.com ,
Wall Street Journal , Microsoft , www.wikipedia.org , www.valleywag.com , www.quantcast.com
The study was prepared by Mikhail Ananievsky ( Embria research team) specifically for the LiveIdea.ru portal.
The Internet is booming, new technologies, standards and concepts for creating Internet resources are constantly emerging. In 2005, they started talking about a qualitative change in the development of the entire Internet as a whole. New ideas and approaches were called “Web 2.0”, its essence lies in positioning the web as a platform. Web 2.0 includes sites using such technologies as ajax, mash-up, web syndication, ideas of tags and tags, as well as Internet resources aimed at socializing, creating communities. In the past few years, a large number of social networks. The largest in the world are myspace.com, facebook.com, xing.com, classmates.com, etc. In RuNet, you can mention such successful projects as classmates ( odnoklassniki.ru ), my circle ( moikrug.ru ), VKontakte ( vkontakte .ru ) and others. Such Internet resources can have an active audience of tens of millions of visitors per month. Moreover, these visitors spend a significant part of their time on these social networks. However, questions arise. Can resources of this type generate income? Are these projects unprofitable? It is worth remembering that the revolution that Google made was not so much the invention of a new type of search, but the discovery of the method of earnings on search engines that did not bring such fantastic profits before. Now, many expect from social networks something similar to the revolution that once made Google
Facebook is currently one of the most promisingly developing social networks on the Internet. Created three years ago by a group of enthusiasts, the project immediately attracted the attention of investors. During these three years, the volume of venture capital investments in the project amounted to about $ 38.5 million. In October 2007, facebook.com was estimated at 15 billion dollars, despite the fact that its income for that year was only 150 million dollars (tons). E. 100 times less).
The purpose of this study is to study the monetization schemes of one of the largest social networks, facebook.com. The history of the project facebook.com is taken to be counted from February 2004, when Mark Zuckerberg (Mark Zuckerberg), along with Dustin Moskovitz (Dustin Moskovitz), Chris Haghes (Chris Hughes), as well as two students at Harvard University, released the first version of this social network. Domain facebook.com, was purchased only in August 2005, for $ 200 thousand from Aboutface Corporation. The project immediately received the support of investors. In the same 2004, one of the founders of PayPal, Peter Thiel, invested 500,000 dollars on facebook.com. Later, in May 2005, venture company Accel Partners invested another $ 13 million in the project. The development of the project after that is proceeding rapidly. In April 2006, facebook.com is already in the top ten among social networks in terms of the number of visitors. In the same year, the project received $ 25 million injections from a number of venturers ( Graylock Partners , Accel Partners, Meritech Capital Partners , Peter Thiel). Total for three years, the volume of venture capital investments amounted to $ 38.5 million.
')
Ventures are usually engaged in equity investments in non-traditional (new, and sometimes completely original) companies. On the one hand, venture capital investments are at increased risk, and on the other hand, the likelihood of obtaining extremely high profits increases. Venture financing is a kind of loan to new companies, a long-term loan without obtaining guarantees, but at a higher percentage than with banks. A very characteristic feature of venture financing is the fact that an investor almost never seeks to acquire a controlling stake in a company, which is fundamentally different from a “strategic investor” or a “partner”. The investor assumes mainly financial risk, and such types of risks as technical, market, managerial, price, etc., are shifted to management, which has a controlling stake in the company.
The cost of the project facebook.com and its total revenues are very impressive figures. In October 2007, Microsoft buys a 1.6% stake in Facebook for $ 240 million. Accordingly, the entire project is estimated at $ 15 billion. In December 2007, the head of the Asian telecommunications conglomerate Hutchinson Whampoa, Li Ka-shing, also bought a small stake in facebook.com. According to Dow Jones, Lee paid $ 60 million for a package of just 0.4%. According to a study by the Wall Street Journal (WSJ, issue dated August 23), facebook.com’s revenue for 2007 was projected at about $ 150 million, at a cost of about $ 30 million.
One of the components of the financial success of the project is its attendance and user activity. In November 2007, facebook.com was visited by more than 86 million active users. At the same time, users browse more than 1 billion 785 million pages per month. Half of the traffic comes from English-speaking countries. 28% of users are residents of the United States, 9.7% - of England and only 9.1% - residents of Canada. This is logical, because facebook.com only supports English interface.
Another component of the project’s success is extraordinary monetization mechanisms. Let's look at the main monetization tools of facebook.com. The main source of income is advertising.
- Standard banner advertising. Almost on all pages of facebook.com below or on the left is an advertising banner. Now facebook.com gets 0.30 euro per thousand impressions (CPM = 0.30 euro). With current attendance, this brings about 780 thousand dollars a month. It is worth noting the extremely low clickability - about 0.04% (for comparison, the largest social network myspace.com - around 0.10%). In August 2006, Microsoft bought exclusive rights to use these advertising sites for three years.
- Advertising on the market . First you need to decide on the terms. Market (marketplace) - a place where registered users place ads for the sale, lease, rental, job ads, etc. A flyer is a short ad associated with any existing ad on the market. Up to 20 flyers are shown on any market page. Any user who placed an ad on the market can advertise it with flyers. The cost of 500 impressions is $ 1, another $ 1 must be paid for each network (global community on a certain basis. For example, students of one university, residents of one city) whose market you need to show an ad. Thus, the minimum fee is $ 2 (500 impressions in one network). This type of advertising brings the project 700 thousand dollars a month. In addition to flyers from users, there are also flyers from amazon.com on the market, but their number is an order of magnitude smaller.
- Facebook.com regularly tries new solutions as part of research into the social media advertising opportunities. For example, in November, a new type of advertising was launched: social . Its essence lies in the distribution of advertising on a social graph: from the user to his friends (usually a social graph means a group of people connected by any relationship: friendly, business, casual, etc. People relate to the top of the graph, and their relationship edges). The display of advertising can be accompanied by a social history: if a user has visited a page dedicated to a product / service on facebook.com or a site that is a member of the facebook beacon project (the facebook beacon project is a group of Internet projects sharing detailed information about the user. Example: Since the fakebook transmits information to Amazon, which allows it to offer more interesting products to the user), then this product / service advertising advertisement is carried out among friends of this user. Also, this display may be accompanied by a photo of the user and a description of his actions (for example, evaluation of the advertised product / service). Of course, various additional filters are possible for advertisements: by gender, by age, by geography, etc. Advertising is placed either in the "news" of the user, or on the page on the left. Advertising prices are determined on an auction basis, but they are not yet formed. This type of advertising, apparently, while brings a small income. While the potential of this type of advertising is still not clear. But in the future, it has every chance to develop into one of the most powerful tools for monetizing social networks.
- The next tool of monetization, sponsorship groups bring facebook.com (the same is observed in myspace.com) the lion’s share of revenue. Sponsored groups are a special type of groups in social networks, intended for positioning a brand, creating and maintaining its active audience. Sponsorship groups have their own advertising platforms, and no other advertisements are shown on the pages of sponsor groups. Support for such a group costs $ 300,000 for three months. Currently (December 2007) there are 230 sponsored groups at facebook.com, among them: Apple, NBA, Nike, Victoria's Secret, etc. In total, sponsorship groups bring the project $ 23 million per month.
- An interesting and very significant source of income are virtual gifts . Their essence lies in the fact that users can give each other for a symbolic price of $ 1 pictures with funny images (Christmas tree, hamburger, pirate flag, flower, etc.) and accompanying inscriptions. Virtual gifts are stored in the user profile. On average, Facebook.com brings about another $ 2 million per month.
Thanks to all these services, the project’s profit is more than covering its costs. Facebook.com's revenue is growing very rapidly: for 2005, $ 10 million was earned, for 2006 - about 50 million, for 2007 it was predicted to be about 150 million. At the same time, monthly income at the beginning of 2007 and at the end differs by more than an order of magnitude.
Russian analogues.
Russian facebook.com can rightly be called vkontakte.ru . Until today, the owners of vkontakte.ru have not attempted to monetize their project. Moreover, its creators have repeatedly stated that there will be no advertising in vkontakte.ru. However, on the basis of a comparative analysis, it is possible to determine the possibilities of monetization of the social network vkontakte.ru. You can also display the approximate amount that can bring these or other services. For example, facebook.com shows that standard advertising accounts for less than 6% of total revenue. If we consider how many times the social network vkontakte.ru is less than facebook.com, then the price of the sponsored group in vkontakte.ru will be relatively small. However, the cost of virtual gifts may well be the same - $ 1. Thus, virtual gifts can be a valuable source of income. You can pay for this opportunity by SMS. Other SMS services are also possible - this market in Russia is fully developed. As an example, you can bring a paid access service to top users, which is widely used in monetizing various online services for dating. Its essence lies in artificially introducing inequality between users, for example, if there are 10 avatars on the main page, then, accordingly, a paid service for displaying your avatar on the main page is introduced (payment is usually taken as the number of impressions). The market (marketplace) on a vkontakte.ru scale can also bring quite decent income. Sponsored groups, virtual gifts and the market can make the social network vkontakte.ru a very profitable project without the use of annoying banner ads. In addition, many innovations of facebook.com in the field of social advertising can be successfully applied in the Russian context. According to the research group Embria , vkontakte.ru on the Russian market can now cost about $ 10-12 million. But in the case of the introduction of monetization mechanisms and an increase in the number of services, and as a result, users are more attached to the project, its price will increase. Western investors can already estimate this project significantly higher.
Sources:
www.comscore.com , www.facebook.com , www.compete.com , www.alexa.com , www.emarketer.com ,
Wall Street Journal , Microsoft , www.wikipedia.org , www.valleywag.com , www.quantcast.com
Source: https://habr.com/ru/post/18465/
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