This is going to be a grab-bag post.
First, I was on my way home from work listening to Marketplace on NPR.
Tangent number one. Am I the only one who waffles between liking Kai Ryssdal or thinking he’s incredibly smug — getting depressed by his subjective encapsulation of the day’s economic news? But I digress.
The main point of this post was the Marketplace story that talked about the market value of social media sites. The thrust of the story was that there is essentially no real model for how they are going to make money on a site like Facebook. Last year they made about $150 million but the market cap is $15 billion. That’s 100 times earnings. With IBM and GE trading at roughly 2 times earnings, it does seem pretty out of whack.
I don’t know what to make of it all. But I do know this. I actually spend a lot of time with my eyeballs on my Facebook pages, and I know a LOT of people who do the same. At some point, in some way, that’s going to prove to be very, very valuable.
Which brings me to tangent number two. What would compel me to hang out on Facebook? Well, it’s generally entertaining. But I have a dirty little secret. I am totally addicted to Scrabulous. And I spend a lot of time looking at those screens. I have seen ads for personality tests, online savings account, the Cirque show that’s coming to town and lingerie. Now, unlike when I’m at Google, I’m not in research or buying mode. I’m there to play Scrabulous, so I’ve never clicked.
What does it all mean? Does it mean that advertising doesn’t work in social media situations? Or that the quality of creative and targeting just hasn’t improved to the point of being compelling for me? Or that digital applications like this should be judged as equal parts branding and direct response?
Seems to me that where lots of eyeballs are, there’s a very viable business model to follow. What do you think?