Tag Archives: Facebook

MySpace vs. Facebook

25 Thursday Oct 2007

Posted by in Social Networking, Technology, Web 2.0

≈ Leave a comment

Tags

,

The buzz continues with Facebook picking up another half a billion dollars today at a $15B valuation, or an amazing ~100 times estimated revenue.

MySpace is trying to defend it’s territory, and in raw numbers it’s still kicking Facebook’s butt. Here’s some interesting data touting MySpace’s might.

It’s astounding really.  It’s easy to jump in and gripe about how ridiculous the valuation is but it’s not totally out of the realm of possibility.  But clearly, Facebook would have to be beyond Google-ish in it’s growth to make it reasonable.

I think an early Internet growth company should get a valuation of somewhere around 20-30 times revenue, and a mature company should get somewhere around 10 times revenue.  Even Google, who is still growing like gangbusters, is incredibly sexy, and swathed in hype, is only worth 14 times revenue.

Facebook is early enough and is growing fast enough that it’s revenue should be growing at more than 100% per year.  At 100%/year, for two years, they would be at ~$600M/year.  Then, they’d have to stay at the 70-80%/year growth rate that Google has to warrant the 14 times revenue number.  And that’s just to justify $15B; by the end of two years, I assume MS and the other investors are hoping it’s worth $30B.

Can they do it?  That’s going to be really, really hard.

Advertisement

Yup, Facebook advertising isn’t terribly effective

12 Thursday Jul 2007

Posted by in Recruiting, Technology

≈ 3 Comments

Tags

There’s some buzz today about the ineffectiveness of Facebook flyer ads.

I wanted to chime in because Homestead has had some experience with it as well, and we found the similar issues, but it’s not all bad news.

We ran recruiting campaigns during the height of recruiting season to local colleges here (Stanford, Berkeley, Santa Clara), schools where a lot of our employees come from.  To keep things fresh, we ran different pictures to see which would capture the most clicks and resumes.  And to save money (of course), we bought the ads using alumni accounts from each of the schools (getting the rate of 10,000 impressions for $5).  And we did the most targeting that Facebook allows; we set the ads to be run to students (as opposed to “Everyone”, assuming that alum have jobs already).

We didn’t spend much on the test ($315 for 630,000 impressions), but that should be enough for a decent test. And the results weren’t great:

Our best return was from Stanford, where we got a whopping 207 clicks from 270,000 impressions, or 0.077%.  That’s almost twice as much as Valleywag is seeing, but it’s still not great.  Do the math, and you get a CPC of $0.65.

A CPC of $0.65 is really not that bad, in the grand scheme of things. There are a few things to keep in mind.

  • If you’re not a member of the school/community your advertising on, the price shoots up four-fold to $10/5,000 impressions, meaning your CPC would be a miserable $2.60.
  • Use a decent picture at the top of your Flyer, something that will stand out.  If you take a look at the Flyer board for your network, a lot of the Flyers are just text, or have bland images.