I would be interested to see what employees make at these tech firms. It’s interesting that these few companies can generate so much revenue. I can’t help but wonder about the larger manufacturing and service based corporations. What does their per employee breakdown look like?

Facebook is unique in that its users have played a significant role, if not the most significant role, in what it is today. According to its S-1 filing, Facebook has 845 million active monthly users. Due to this widespread user base combined with the nature of Facebook, the news of the IPO has been particularly intriguing.

Users are excited because they feel a special connection to Facebook. While it is substantial news, there are some issues being raised about it from a business perspective, particularly over its estimated valuation.

Is Facebook worth $100 billion? What do you think?

According to Francis Gaskins, President and Partner at IPODesktop.com, the past 4-5 quarters are very indicative of its future. Based on the information that was released in the filing, he does not think $100 billion is a reasonable valuation for Facebook.

“At $100 billion market cap, Facebook would be selling at about 53 percent of Google’s cap,” he said.

As he explains, Facebook’s revenue in 2011 was $3.7 billion. Google, on the other hand, had revenue of $46 billion, which is more than 10 times the amount of Facebook’s. Given this data, Gaskins doesn’t see how Facebook is worth 53 percent of Google.

Gaskins also points out that the past quarters are telling of the company’s rate of growth. He told us he was “quite surprised” when he saw the details.

“[If] you look at what happened for December 2010, March, June, and September of 2011, oddly enough, what you will find is the operating earnings were flat,” he said. “The net after tax earnings were flat, and the margins – the profit margins – went down.”

He believes the $100 billion valuation points to the ego of Mark Zuckerberg as well as the fact that Facebook is falling into the trap of believing their own press releases, a move that he calls “very, very dangerous.”

“The credibility of management’s forecast is very, very important,” he said.

Gaskins told us that Facebook didn’t have a solid strategy for being profitable that would appease Wall Street, especially since its revenue was flat even without any real competitors. However, now that Google+ exists and is appearing to gain ground, he said that Facebook’s current projections could really hurt it. He believes that Facebook should have filed its IPO last summer when it was the only player in the space.

Another issue he sees from a business perspective is how Facebook is defined.

“It’s not a technology company,” he said. “It’s a consumer of technology, which is different. They’re offering a service, and they’re not selling technology.”

Facebook is, however, an Internet advertising company like Google. According to Price Waterhouse, the yearly compound growth rate for Internet advertising will be 12 percent through 2015. So, at this rate, it doesn’t translate into high multiple market growth for Facebook.

With these revelations and others being analyzed, the social giant will likely face a lot of scrutiny. What’s bad is that Facebook is about to enter the quiet period, which means that it will not be able to respond to the negativity.

On the bright side, Gaskins did say that Facebook’s IPO would have a positive impact on the economy.

“It’ll definitely help the economy because there will be a lot more money flowing around in the tech area,” he said.

A proposed bill by Fourkiller, if voted in, would levy a 1% tax on games rated “teen”, “mature” or “adult only”. The funds raised would go towards making kids less fat and less violent. How this would be achieved exactly is not mentioned, but the “Childhood Outdoor Education Revolving Fund” and “Bullying Prevention Revolving Fund” are where the dolllars would be diverted.

Fourkiller explains the urgency of the problem:

“it being immediately necessary for the preservation of the public peace, health and safety…[the law] shall take effect and be in full force from and after its passage and approval.”

In any event, the representative seems very happy in his picture and I hope he has good luck fighting laziness and obesity. The bill would take effect July 1st of this year if it were passed. One question I would ask Fourkiller is, “why are these lazy children playing games which are rated to be only for teens and adults?”. It will be interesting to see what happens with this one.

For your CEO and CFO to take social media campaigns seriously, you need to be able to demonstrate a direct measurable impact that either reduces costs (say in reduced customer service heads) or increases sales. At the moment, most social campaigns are doing neither.

Both Dell and Sony have both stated that they have generated real sales from social media program, but these are definitely exceptions.

But the majority of marketers don’t even measure ROI at a simple level let alone try and attribute sales. It’s not that there aren’t any tools to do so, or that there isn’t a formula for calculating ROI; it’s just that links to actual sales from social media programs are often tenuous. And where you have tenuous links, then ROI becomes very subjective and only as good as the assumptions that go into the formula. In my experience, CFOs don’t like subjective!

There are lots of tools becoming available to help you measure sentiment, comments and click through, but all of these are essentially measuring influence, not measuring what really counts. So perhaps the bigger question should be, “How do we turn fans into paying customers?”

Social media marketing is still a long way from reliably generating revenue. Generally these programs most often start with a ‘Broadcast’ stage where the approach is to use blogs and social pages to recruit fans and push a corporate message. The goal here is most often to build large follower bases and communicate with customers and prospects, and educate them about your products and services.

Some sites are delivering service as customers seek to get specific answers, to connect with the brand and get service, or just be heard and share their thoughts and experiences. Many brands struggle to deal with this stream, especially in the B2C space where the stream can potentially become an overwhelming torrent.

More often than not this demands dedicated headcount, and your CFO may well be asking where the savings or increased sales are.

This is where many brands are now: Their social media marketing has established a good fan following, but it’s costing more than they expected to service the requests and moderate the community. There are few attributable sales that can be put against all this effort.

Linking Ecommerce and Social Media

To convert fans into paying customers though requires more. In fact, it needs integration between ecommerce sites and social media sites so that the data can be linked and fans identified while on the ecommerce site. While your sites are disconnected, all your fans are anonymous; you have no idea whether they are a fan or not, so you can’t market to them in a relevant way. This type of integration is deeper than the commonly seen ‘Friend us on Facebook’ or ‘Follow us on Twitter’ hyperlinks which you see on many ecommerce sites.

What’s needed is to allow customers to log in to their social network accounts on your ecommerce site. Over time this will become commonplace and will surpass many registration processes. When this happens, you can then associate browsing behavior, purchases and abandoned shopping carts with the individual fan.

You May Ask ‘Why Would a Fan Sign in on my Site?’

The answer is simple. The number one reason why consumers friend a brand on a social network is to receive special offers and promotions. So by putting up a simple logo offering promotions via social networks, you’re giving customers a reason to share with you.

Once they are identified, then a whole spectrum of online marketing campaigns become possible for the first time. For example, you might choose to follow up abandoned shopping carts using their social network. Or you might want to run member-get-member promotions to encourage your customers to encourage their friends to buy. This is where the CEO and CFO will start getting interested: Now your campaigns can directly drive sales.

For your CEO and CFO to take social media campaigns seriously, you need to be able to demonstrate a direct measurable impact that either reduces costs (say in reduced customer service heads) or increases sales. At the moment, most social campaigns are doing neither.

Both Dell and Sony have both stated that they have generated real sales from social media program, but these are definitely exceptions.

But the majority of marketers don’t even measure ROI at a simple level let alone try and attribute sales. It’s not that there aren’t any tools to do so, or that there isn’t a formula for calculating ROI; it’s just that links to actual sales from social media programs are often tenuous. And where you have tenuous links, then ROI becomes very subjective and only as good as the assumptions that go into the formula. In my experience, CFOs don’t like subjective!

There are lots of tools becoming available to help you measure sentiment, comments and click through, but all of these are essentially measuring influence, not measuring what really counts. So perhaps the bigger question should be, “How do we turn fans into paying customers?”

Social media marketing is still a long way from reliably generating revenue. Generally these programs most often start with a ‘Broadcast’ stage where the approach is to use blogs and social pages to recruit fans and push a corporate message. The goal here is most often to build large follower bases and communicate with customers and prospects, and educate them about your products and services.

Some sites are delivering service as customers seek to get specific answers, to connect with the brand and get service, or just be heard and share their thoughts and experiences. Many brands struggle to deal with this stream, especially in the B2C space where the stream can potentially become an overwhelming torrent.

More often than not this demands dedicated headcount, and your CFO may well be asking where the savings or increased sales are.

This is where many brands are now: Their social media marketing has established a good fan following, but it’s costing more than they expected to service the requests and moderate the community. There are few attributable sales that can be put against all this effort.

Linking Ecommerce and Social Media

To convert fans into paying customers though requires more. In fact, it needs integration between ecommerce sites and social media sites so that the data can be linked and fans identified while on the ecommerce site. While your sites are disconnected, all your fans are anonymous; you have no idea whether they are a fan or not, so you can’t market to them in a relevant way. This type of integration is deeper than the commonly seen ‘Friend us on Facebook’ or ‘Follow us on Twitter’ hyperlinks which you see on many ecommerce sites.

What’s needed is to allow customers to log in to their social network accounts on your ecommerce site. Over time this will become commonplace and will surpass many registration processes. When this happens, you can then associate browsing behavior, purchases and abandoned shopping carts with the individual fan.

You May Ask ‘Why Would a Fan Sign in on my Site?’

The answer is simple. The number one reason why consumers friend a brand on a social network is to receive special offers and promotions. So by putting up a simple logo offering promotions via social networks, you’re giving customers a reason to share with you.

Once they are identified, then a whole spectrum of online marketing campaigns become possible for the first time. For example, you might choose to follow up abandoned shopping carts using their social network. Or you might want to run member-get-member promotions to encourage your customers to encourage their friends to buy. This is where the CEO and CFO will start getting interested: Now your campaigns can directly drive sales.

For your CEO and CFO to take social media campaigns seriously, you need to be able to demonstrate a direct measurable impact that either reduces costs (say in reduced customer service heads) or increases sales. At the moment, most social campaigns are doing neither.

Both Dell and Sony have both stated that they have generated real sales from social media program, but these are definitely exceptions.

But the majority of marketers don’t even measure ROI at a simple level let alone try and attribute sales. It’s not that there aren’t any tools to do so, or that there isn’t a formula for calculating ROI; it’s just that links to actual sales from social media programs are often tenuous. And where you have tenuous links, then ROI becomes very subjective and only as good as the assumptions that go into the formula. In my experience, CFOs don’t like subjective!

There are lots of tools becoming available to help you measure sentiment, comments and click through, but all of these are essentially measuring influence, not measuring what really counts. So perhaps the bigger question should be, “How do we turn fans into paying customers?”

Social media marketing is still a long way from reliably generating revenue. Generally these programs most often start with a ‘Broadcast’ stage where the approach is to use blogs and social pages to recruit fans and push a corporate message. The goal here is most often to build large follower bases and communicate with customers and prospects, and educate them about your products and services.

Some sites are delivering service as customers seek to get specific answers, to connect with the brand and get service, or just be heard and share their thoughts and experiences. Many brands struggle to deal with this stream, especially in the B2C space where the stream can potentially become an overwhelming torrent.

More often than not this demands dedicated headcount, and your CFO may well be asking where the savings or increased sales are.

This is where many brands are now: Their social media marketing has established a good fan following, but it’s costing more than they expected to service the requests and moderate the community. There are few attributable sales that can be put against all this effort.

Linking Ecommerce and Social Media

To convert fans into paying customers though requires more. In fact, it needs integration between ecommerce sites and social media sites so that the data can be linked and fans identified while on the ecommerce site. While your sites are disconnected, all your fans are anonymous; you have no idea whether they are a fan or not, so you can’t market to them in a relevant way. This type of integration is deeper than the commonly seen ‘Friend us on Facebook’ or ‘Follow us on Twitter’ hyperlinks which you see on many ecommerce sites.

What’s needed is to allow customers to log in to their social network accounts on your ecommerce site. Over time this will become commonplace and will surpass many registration processes. When this happens, you can then associate browsing behavior, purchases and abandoned shopping carts with the individual fan.

You May Ask ‘Why Would a Fan Sign in on my Site?’

The answer is simple. The number one reason why consumers friend a brand on a social network is to receive special offers and promotions. So by putting up a simple logo offering promotions via social networks, you’re giving customers a reason to share with you.

Once they are identified, then a whole spectrum of online marketing campaigns become possible for the first time. For example, you might choose to follow up abandoned shopping carts using their social network. Or you might want to run member-get-member promotions to encourage your customers to encourage their friends to buy. This is where the CEO and CFO will start getting interested: Now your campaigns can directly drive sales.

For your CEO and CFO to take social media campaigns seriously, you need to be able to demonstrate a direct measurable impact that either reduces costs (say in reduced customer service heads) or increases sales. At the moment, most social campaigns are doing neither.

Both Dell and Sony have both stated that they have generated real sales from social media program, but these are definitely exceptions.

But the majority of marketers don’t even measure ROI at a simple level let alone try and attribute sales. It’s not that there aren’t any tools to do so, or that there isn’t a formula for calculating ROI; it’s just that links to actual sales from social media programs are often tenuous. And where you have tenuous links, then ROI becomes very subjective and only as good as the assumptions that go into the formula. In my experience, CFOs don’t like subjective!

There are lots of tools becoming available to help you measure sentiment, comments and click through, but all of these are essentially measuring influence, not measuring what really counts. So perhaps the bigger question should be, “How do we turn fans into paying customers?”

Social media marketing is still a long way from reliably generating revenue. Generally these programs most often start with a ‘Broadcast’ stage where the approach is to use blogs and social pages to recruit fans and push a corporate message. The goal here is most often to build large follower bases and communicate with customers and prospects, and educate them about your products and services.

Some sites are delivering service as customers seek to get specific answers, to connect with the brand and get service, or just be heard and share their thoughts and experiences. Many brands struggle to deal with this stream, especially in the B2C space where the stream can potentially become an overwhelming torrent.

More often than not this demands dedicated headcount, and your CFO may well be asking where the savings or increased sales are.

This is where many brands are now: Their social media marketing has established a good fan following, but it’s costing more than they expected to service the requests and moderate the community. There are few attributable sales that can be put against all this effort.

Linking Ecommerce and Social Media

To convert fans into paying customers though requires more. In fact, it needs integration between ecommerce sites and social media sites so that the data can be linked and fans identified while on the ecommerce site. While your sites are disconnected, all your fans are anonymous; you have no idea whether they are a fan or not, so you can’t market to them in a relevant way. This type of integration is deeper than the commonly seen ‘Friend us on Facebook’ or ‘Follow us on Twitter’ hyperlinks which you see on many ecommerce sites.

What’s needed is to allow customers to log in to their social network accounts on your ecommerce site. Over time this will become commonplace and will surpass many registration processes. When this happens, you can then associate browsing behavior, purchases and abandoned shopping carts with the individual fan.

You May Ask ‘Why Would a Fan Sign in on my Site?’

The answer is simple. The number one reason why consumers friend a brand on a social network is to receive special offers and promotions. So by putting up a simple logo offering promotions via social networks, you’re giving customers a reason to share with you.

Once they are identified, then a whole spectrum of online marketing campaigns become possible for the first time. For example, you might choose to follow up abandoned shopping carts using their social network. Or you might want to run member-get-member promotions to encourage your customers to encourage their friends to buy. This is where the CEO and CFO will start getting interested: Now your campaigns can directly drive sales.

"Among major economic measures, Industrial Production (IP) and Personal Consumption Expenditures (PCE) have the highest correlations with advertising, and forecasts of these variables inform our predictions of advertising revenue growth and decline," says MAGNA. "While consensus forecasts for PCE have not changed meaningfully, expectations for IP have improved.  As a result, we are moderating our 2010 advertising forecast and now expect normalized advertising revenues (excluding local TV political and national TV Olympic revenues) to decline 1.3% next year."

The firm previously published expectations for a decline of 2.1% in 2010. In total, they expect suppliers to generate $159 billion of normalized advertising revenue next year.

For the fourth quarter of this year, MAGNA forecasts that U.S. media suppliers will collectively generate 9% less ad revenue than the year before. They also expect industry revenues to fall from $47.5 billion in the fourth quarter of 2008 to $43.2 billion.

"These figures reflect a moderating pace of decline compared to estimated revenue reductions of 13% during the third quarter and 18% declines during each of the first two quarters of this year," says MAGNA. "As we previously forecast, the first half of 2009 marked the bottom of the ad-supported media economy’s decline."

Year-over-year changes in PCE fell for three consecutive quarters between October 2008 and June 2009.No period since quarterly records were first published back in 1947 has recorded any decline in PCE before the current downturn, according to MAGNA. In addition, IP fell at a quicker pace than any time since 1975 in the last several quarters.

In his post announcing the milestones, CEO Mark Zuckerberg says that they’d hoped to reach cash positive sometime next year—but, happily, they made enough to cover their operating expenses starting last quarter.

It’s been a while since we’ve heard financial news from Facebook—and the last reports weren’t so good. Almost a year ago, many were speculating whether Facebook was headed for financial ruin, and their ad rates had fallen. And less than six months ago, there were some reports that Facebook was snubbing a $4B valuation despite needing the cash the sale would have given them. (A far cry from $15B, eh?)

Up to this point, it seemed that Facebook was struggling to monetize itself enough to cover its costs. But according to Zuckerberg, their finances are better than fine. One recent effort that may have helped (but, let’s be honest, is so new that it probably hasn’t made a whole lot of money yet) was opening the gift shop to developers. Inside Facebook notes a few other potentially contributing efforts:

What’s driving Facebook’s revenue growth? A combination of revenue streams: Facebook’s self-service ad business has been very strong lately, it continues to invest heavily in brand advertising efforts, and it also continues to release many experimental expansions to its virtual goods and virtual currency business, Facebook Credits. The company is also still deriving revenue from its advertising deal with Microsoft, signed when Microsoft invested in Facebook in 2007.

If Facebook is a microcosm of the Internet, and they make money off serving ads that lead to other parts of their site (driving up time onsite and possible ad rates), perhaps this is a good sign for the Internet at large.

What do you think? Is Facebook’s cash positive status a sign of a turn around? Or are clever new monetization strategies keeping Facebook ahead of the curve?

Comments

While I am not an analyst I did think about staying at a Holiday Inn Express over the past year so I qualify for jumping into the fray, right? Let’s hear what the RWW folks had to say first though.

While it’s unlikely that Twitter CEO Evan Williams was wearing a Dr. Evil costume when he delivered the news, he had the pleasure of announcing his company’s $1 billion dollar valuation today at an all hands meeting. According to TechCrunch, the company has raised a $50 million dollar funding round and the money will be in the bank shortly. Given the fact that Twitter turned down an offer to be purchased by Facebook earlier in the year, it appears the two are about to tango.

So of course, this conversation wouldn’t be nearly as much fun without bringing Facebook into the mix. Facebook is starting to look almost like IBM compared to Twitter. What with actual revenue generation plans and actually having the audacity to be cash flow positive one begins to wonder if Facebook is going to actually merit its own valuation. As we mentioned yesterday, Master of the Universe, Mark Zuckerberg, has something to say in the Facebook blog.

We’re also succeeding at building Facebook in a sustainable way. Earlier this year, we said we expected to be cash flow positive sometime in 2010, and I’m pleased to share that we achieved this milestone last quarter. This is important to us because it sets Facebook up to be a strong independent service for the long term.

So is Twitter in for the long term? They certainly still have the buzz going and now there appears to be a a real Facebook faceoff looming for the foreseeable future.

In the past, ReadWriteWeb has looked at Twitter’s platform potential. The service has already been used to create meme trackers, emergency alert services, news feeds and brand monitoring tools. As the infrastructure and search have improved, Twitter has become the go-to site for real time media. But can the company make a Facebook-like leap?

Facebook has added Twitter like features so why not? So what’s your take? I bet there at least a billion opinions on this one.

Comments