Archive for category Facebook

Date: December 7th, 2010
Category: Social Media

Social Media Platforms as The “Go To” for Breaking News

Yesterday, we learned that Elizabeth Edwards, the courageous separated wife of former Presidential candidate John Edwards, battle with cancer took a turn for the worse and her doctors recommended against any further treatment. She decided to send a message to her fans and supporters via Facebook. Also, the owner of the Denver Broncos announced he fired head coach Josh McDaniels over Twitter. Individuals and corporations are taking control over their personal brand and messaging from the traditional press and also wisely choosing to connect with their loyal supporters FIRST. Using social media for news/press distribution is certainly not new but we seem to be turning a corner in terms of mainstream utility and acceptance.

Date: March 28th, 2009
Category: Facebook, Livesteez, Video

International Traffic: Not All Growth is Good

by J. Moguldom

Recently, BusinessWeek came out with a story about Facebook trying to broker a $100 million leasing deal to finance an expansion of their server infrastructure. This week, they are expected to reach a massive 200M users milestone with no sign of topping out anytime soon. I have been extremely bullish on Facebook as a scalable platform with a quality offering but I am becoming increasingly bearish on facebook the business. These are two different things and I believe the latter is far more important.

Over 70% of their 200M users are not based in the United States and most of these online advertising environments are in their infancy leading to weak CPM’s and ROI. For example, U.S. visitors may back out to an average of $2 CPM while international traffic yields only 20 cents. Facebook has chosen to build out and manage their own server architecture and the site reliably stays up with few glitches but it’s increasingly expensive to manage this stuff when you have a user base this massive. Let’s create a term called EPM for expenses per 1000 impressions vs the conventional CPM which covers how much a publisher or website gets paid per 1000 of advertising impressions. On international traffic, FB’s EPM is signifitantly higher than their CPM or there is a lot more money going out than coming in.

Facebook’s US traffic is where their bread is currently buttered and will likely top out this year just because everyone and their grandma is already on the thing. The most profitable part of your business has topped out while the least profitable parts of your business, international, is going gangbusters. If your EPM is high at around 1.20 while your CPM for the same traffic is at .20, you’re in some serious trouble. Especially, with the spread between the two widening out, driven by strong traffic growth. I expect the international share of FB’s total traffic to keep increasing and maybe reach 80-90% and this presents a material profitability problem for Zuckerberg and Co. Maybe they have something up their sleeve we don’t know about but if FB was a stock and broken up into 2 different segments, I would be short on the business and long on the product offering. If Facebook’s international business ever becomes profitable, I believe you are looking at a minimum $20 billion dollar business.

The ‘all growth is not good ‘theme is relevant to our Livesteez platform which carries video that is pretty expensive to stream to visitors. We could be in the same boat this year if video becomes our Facebook international traffic problem. We don’t want the video side of our business being 70%+ of total traffic on Livesteez unless we are already built to ensure that is breakeven- profitable video traffic. If video is at breakeven, that’s fine, we would let video blow up on the site as the new user upside will bleed over into more profitable areas of the site such as news content. The guy who comes to watch a funny video (breakeven traffic) clip stays and reads a news story (profitable traffic). Without the funny video, you may have not brought the guy into the new Livesteez.

All growth is not good.