Will Facebook Bite The Dust

Facebook is a social networking website popular with teenagers. It is ranked 7th most visited site in U.S. with 2.3 million photos uploaded daily by the members. That sure is an amazing figure. Like MySpace, Facebook is a potential buyout target for the big guns. But surprizingly Facebook has rejected any offer thrown at them which also includes the offer from Yahoo YHOO for $900 million. Makes one wonder why are they being so silly ? Or maybe not. Let us dig deep.


Facebook & Comcast Deal

Facebook announced a deal with Comcast CMCSA last week. As part of the deal, registered Facebook members can upload, share and rate the videos on Comcast’s video-sharing web site called Ziddio. These videos will also be available on Comcast’s ON DEMAND service. Few of the best videos will make it to the television series. This deal will increase the sign ups at Facebook and generate more traffic. For Comcast, the revenue will come from selling advertisements for videos and pay per view charges.

Facebook & Jobster Deal
There is also a possibility that Facebook will hook up with Jobster. As part of the deal Facebook members can post jobs, create their own profile and tag their skillsets. Additionally members can have referrals from current employees. This definitely is a cool way to show off your profile, which can help hiring managers cross-check the accountability of the person they are hiring. Again with this deal, there will be a spike in the sign-ups at Facebook and Jobster which is obviously beneficial to both companies.

Positives

  1. When Yahoo made an offer to Facebook, within hours Facebook users created hundreds of groups, protesting against the possible acquisition. This is an indication of its loyal community. According to Facebook spokesman members spend an average of 18 minutes a day on the site.
  2. Their approach to product planning and feature enhancements has made Facebook users certain of one thing that it’s all about communications. Too many competing social networks are moving away from that core. (Source: GigaOm)
  3. Facebook has been actively signing up deals with other affliated sites to generate traffic and keep their members hooked up for more to come.

Negatives

  1. Generating revenue is always a challenge. Their expected sales is not generating as much revenue as planned before.
  2. There is too much competition.
  3. Facebook advertisers have gone home disappointed of lately.
  4. Teenagers are always on the look for cool products and features. If Facebook cannot keep up with those demands, they might not be a dominant force in the world of social networking.
Conclusion: This year will be an interesting year for Facebook. If they can generate revenue from their online traffic, they can turn into a house-hold or should i say a dorm brand. Each and every teenager would be hooked up on it. However if they cannot capitalize on this traffic we are looking at a potential buyout. Unfortunately for Facebook I doubt if Yahoo will make the same juicy offer again and they might have to settle for much less.

Recommendation: Buying out Facebook would be the best thing that can happen to Yahoo. This would mean that with Flickr and Facebook, Yahoo would be ranked #1 in terms of the number of photos uploaded daily and eventually it means more traffic and more revenue from advertisements.

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