Facebook have 18 million users, plenty. However MySpace has 100 million + and sold for a mere $580 million to News Corp’s in 2005. YouTube sold to Google for a reported $1.65 billion in 2006 but it serves over 100 million video’s a day and has over 25 million visitors a month. So what makes Facebook so valuable? It gets relatively huge traffic levels but not on par with YouTube or MySpace. Despite now being available to anyone it began life as an exclusive network for students (you needed an educational email to register) and this is still its primary user group.

1. Why Facebook is worth between $6.5 billion and $10 billion
http://www.pjdesignsandconcepts.com/info/why-facebook-is-worth-over-10-billion/
Yahoo! have been in talks with Facebook for over a year now and apparently recently got shy at
Facebook’s $1 billion asking price but as I will explain here Yahoo! have missed out on an absolute
bargain.
Facebook have 18 million users, plenty. However MySpace has 100 million + and sold for a mere $580
million to News Corp’s in 2005. YouTube sold to Google for a reported $1.65 billion in 2006 but it serves
over 100 million video’s a day and has over 25 million visitors a month. So what makes Facebook so
valuable? It gets relatively huge traffic levels but not on par with YouTube or MySpace. Despite now being
available to anyone it began life as an exclusive network for students (you needed an educational email to
register) and this is still its primary user group.
So where’s the money?
Currently Facebook displays conventional banner advertising on users’ homepages and selected pages
through the site. Adverts are unobtrusive and random in so much as they’re not targeted at any particular
user- they’re just served to the entire site on a random basis. Facebook are doing ok out of this arrangement
on the basis of the number of page impressions they receive, although in reality they’re keeping advertising
at a minimum in order to build up the value of the site for its eventual sale which will almost certainly
happen in 2007/8. Smart guys!

2. The power of information
Register with Facebook and quickly you can find yourself giving away huge volumes of valuable personal
information. Think about it… Facebook know your name, they know how old you are (actually your D.O.B
which is infinitely more valuable as I’ll go on to explain), they know if you’re male or female, they know
your hometown, your postcode if you choose to give it away (although I doubt many users choose this),
they know if you’re single, in a relationship (and who with), married, divorced etc, they know your sexual
orientation. Ok so you can answer all these questions as honestly, dishonestly or vaguely as you like but
from what I’ve seen people happily give accurate information about themselves as it’s their friends and
potential friends who are going to see it- and no one else right?
But what else do Facebook know? Well they know where you went to school, where you work, more
sinisterly your religious and political views. From this we can start to build up a pretty valuable market
profile. As I’m telling Facebook I may as well tell you I’m Male, 22 (born in August), Straight, in a
relationship, conservative, atheist from Brighton, England. Went to school at Blatchington Mill Secondary,
college at a place called BHASVIC, University at Bournemouth. From this information we can draw
further assumptions- I live in Brighton and based on the location of my schools catchment area we could
pretty accurately map places in Brighton I know about, visit, and live in (think Google maps API). I’m a
straight; conservative from a reasonably wealthy area in full time employment therefore I’m probably
white, middle class with a decent disposable income.
So what else? Facebook know what you look like, they probably know what you used to look like a few
years ago as well. Probably most significantly they know who your friends are, they know how you know
them, they know when you talk to them, what they look like and ultimately they know exactly the same
information about them as they know about you- you’re interests, likes and dislikes and your friends tastes
as well.

3. They know your email address, so they know if you use Hotmail, Yahoo! Mail etc. They know your phone
number so they could pretty easily work out your phone provider. They have your IP address so they could
work out your ISP. They know where you’ve arrived at the site from so they know what search engine you
use (enter Yahoo! And Google to the bidding war), what browser you’re on, they know if you’re visually
impaired or have learning disabilities from the settings on your browser.
Facebook know when I’m logging in and from where so they know the hours I work, if I’m using the
internet at work, the pages I leave Facebook to go to or the pages I come from so they know what other
sites I look at. I can set my current status and tell Facebook exactly what I’m doing or feeling right this
second.
Ok so you get the picture by now, one last thing though, is your Facebook password the same as your email
account password, your internet and telephone banking password, every other password you use in your
daily life (because until I wrote this post mine was!) how much more information do you want to give
away?
What’s the risk here?
Realistically it’s pretty slim. Facebook are a nice bunch of guys and a great site, I love using it and despite
knowing what I know about information security and the like I choose to give away a big chunk of the
information I’ve talked about here.
Yahoo! And Facebook
So if Yahoo!, Google or god forbid Microsoft successfully purchase Facebook (as I say I’m reasonably
confident this will happen this year) the Orwellian lucid dream proposed by this post becomes a perpetual
nightmare. Imagine a company who have made billions and dominated the fastest growing market in the
world by developing algorithms which crawl hundreds of millions of pages of random information (the
internet) and categorize that information with the ultimate goal of matching it to businesses and selling
advertising.
The search algorithm let loose on Facebook
Imagine the search engines let loose on Facebook. An algorithm tuned to pick out profile information
(John, born 13.08.84). Map it to keywords in personal interests i.e. football, Manchester United. Plot your
location on a map i.e. Brighton, England. Follow links to your closest friends with similar interests i.e. Bob
and Dave who live round the corner and serve me an advert something like:
Happy birthday for next week John.
Did you know its Dave’s birthday the week after?
Why not book tickets for Brighton and Hove Albion vs. Manchester united on 12.08.07
Click here to book now and get 3 tickets for the price of 2 (why not ask bob to come along- he supports
Brighton and you haven’t spoken in a while).
Book today and we’ll give you a half price limo from your house to the game with trashy-limo’s.com.
Now that’s powerful advertising and it’s just around the corner. If Facebook has 25 million registered users
by the time it’s sold, half of whom visit every day that’s a minimum 12.5 million page impressions a day.
Serve the advert above at $1 a click (which is far less than its worth based on the current AdWords CPC
model) expect a click through rate of up to 10% based on the precise nature of the advertising and that’s
$1.2 million minimum a day- almost $½ a billion a year. Grow that user group to 50 million (realistic if
Google or Yahoo! can tap into their existing user database) and sell ad space on an affiliate basis say the
football tickets at $300 with a 10% affiliate kickback and a 10% conversion rate =$3 per user x 25 million

4. users =$75 million a day or $2737500000 in year 1! OK lets not get carried away people aren’t going to
spend $300 every other day but the logics there and so the cash.
Will the audience except it?
Better quality advertising means less advertising- less websites rammed with banners so you can’t find
what you’re looking for, less popups, less low quality products. This is the main driving force behind the
success of search marketing programs and profile based advertising is already in place with Google’s
personalized search returning more targeted AdWords ads than previously possible. If it falls into the hands
of Microsoft then people may be more wary but with the image of Google or Yahoo! and Facebook profile
information is seen as soft information as the company doesn’t sell you products directly and he service is
free. It’s the way the internet is going and I believe it’s where we’ll be in 5 years.
Identity theft
The point I’ve been making tediously through this post is that we should be more careful about what
information we give up and to whom. If the internet was a county it would be **** Germany and Facebook
would be the Gestapo! Social utilities like Facebook are afforded the sort of privileged information fascist
governments the world over would and have killed for. We moan about identity cards being introduced in
the UK (ironically there’s several Facebook groups dedicated to the cause) but we happily give up personal
details to a bunch of college geeks in the states who are ultimately planning on selling our details to the
highest bidder (the value of any site is based on the volume, quality and amount of information they have
about their traffic- but best of luck to them) possibly to the company who already control the majority of
world business systems through the windows platform.
This post is not meant to scare- it’s simply a recognition of the power of new internet technologies, their
possibly applications and to pose the question- if your Facebook friends are your real friends shouldn’t they
know your birthday? Are Facebook really going to buy you a present?!
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