ITS GLOBAL user base is climbing inexorably towards 1 billion and next week, when it floats as a public company, Facebook is expected to be valued at a staggering $US95 billion. But to the company you are worth as little as $4.54 a year.

That’s the amount of money Facebook is likely to earn in advertising revenue this year from each of its 11 million Australian users, despite the fact that Australians spend more time on the social networking site than anywhere else.

It is marginally more than the global average but less than half the amount of dollars that each American and Canadian generates for the company.

Yet analysts expect an increase in advertising after Facebook goes public next week, as the pressure mounts from shareholders to lift the average revenue per user to higher levels.

Advertisers typically use Facebook as a cheap means of getting to lots of people with simple ads that appear on the right hand side of a person’s page.

John Miskelly, a director of the media buying agency MediaCom, said more and varied types of ads might appear, including handing over the entire home page to a single advertiser for the day, an increase in banner ads and more advertising messages appearing in a user’s news feed, a space usually dedicated for personal posts.

He also raises the prospect that Facebook may open up the reams of data that it compiles on users to allow big spending advertisers to access it directly to serve tailored advertising to users.

At the moment advertisers do not have direct access to the data but rather they give Facebook a wish list of who they want to target, based on basic information such as age, gender and interests, and then Facebook places the ads on their behalf.

Facebook aggregates users into ”types” based on the information they hand over but mining that information more deeply would give advertisers more and deeper knowledge about people they want to target with ads.

”Getting hold of that kind of data would be a marketer’s dream. It’s a goldmine. It would really improve the targeting with their other online advertising as they would be reaching the right people with their messages,” Mr Miskelly said.

The editor of Social Media News, David Cowling, expects mobile phone users will see more ads appear on their handset screen, an area the company has yet to exploit but has flagged as an area of growth.

Mr Cowling puts the lower ad revenue per user in Australia down to the fact that to date few small businesses are using Facebook for advertising.

He said Facebook’s founder, Mark Zuckerburg, who will remain a large shareholder, would resist commercialising the site too much. ”He is always focused on new products and making the site better. Generating new revenues has never really been his goal. Whether that remains the case after the IPO [float] remains to be seen.”

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YouTube founders’

Delicious new venture

Yahoo! has sold Delicious to YouTube founders Chad Hurley and Steve Chen, who promised to continue and grow the popular social bookmarking site.

Financial details of the transaction were not disclosed.

Hurley and Chen, who sold YouTube to Google for $US1.65 billion in 2006, said they planned to integrate Delicious with their new San Mateo, California-based internet company AVOS.

“We’re excited to work with this fantastic community and take Delicious to the next level,” AVOS chief executive Hurley said in a statement.

“We see a tremendous opportunity to simplify the way users save and share content they discover anywhere on the web,” Hurley said.

The YouTube co-founders said they would seek to use Delicious to “develop innovative features to help solve the problem of information overload.”

“We see this problem not just in the world of video, but also cutting across every information-intensive media type,” Chen said.

Yahoo! said it will continue to operate Delicious until July, when users will transitioned over to AVOS.

Yahoo! said the sale of Delicious was part of a product strategy that “involves shifting our investment with off-strategy products to put better focus on our core strengths and fund new innovation.”

“We believe this is the right move for the service, our users and our shareholders and look forward to watching the Delicious technology develop,” Yahoo! said.

Delicious, which has millions of users around the world, was launched in 2003 and bought by Yahoo! in 2005.

AFP   Sourced & published by Henry Sapiecha

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Facebook investors heading

for the exits as value hits $70bn

A group of Facebook shareholders is seeking to offload $US1 billion worth of shares on the secondary market, a sale that would value the company at more than $US70 billion, according to five sources with direct knowledge of the situation.

It would represent one of the largest transactions of Facebook shares to date and points to a growing wariness among early-stage investors and employees who fear Facebook’s growth cannot keep pace with its market valuation.

The sellers have lowered their price after previously trying to offload shares at a price that valued the company at $US90 billion, which would make Facebook more valuable than Time Warner and News Corp combined. But buyers balked.

“At the current valuation where it is, it is really hard to justify the investment,” said Sumeet Jain, partner at venture capital firm CMEA Capital, who has examined Facebook deals recently and has taken a pass. “It’s hard to imagine it will turn into a $US270 billion company in the next few years.”

The current deal, which includes stock held by Facebook employees, is awaiting approval from top Facebook executives including Chief Executive Mark Zuckerberg and Chief Financial Officer David Ebersman, according to two sources.

Facebook declined to comment.

Investors, ranging from venture capital firms to rich individuals to investment banks, have scrambled to get a piece of the privately held company before its expected IPO next year.

Facebook raised $US500 million from Goldman Sachs Group, and Russia’s Digital Sky Technologies, for instance, giving it a market value of $US50 billion. Weeks later, private equity firm General Atlantic piled into the company, valuing it at $US65 billion, according to CNBC.

Tim Draper, the well known venture capital partner who founded Draper Fisher Jurvetson, told Reuters this month he recently looked at buying shares of Facebook deals, but passed because of an unattractive valuation.

One wealthy person, who has fielded calls for the past month involving Facebook pitches in the range of $US200 million to $US1 billion, is also sitting on the sidelines.

“It’s priced to perfection in the private marketplace,” said the person, who did not want to be named. The person said the pitches implied a valuation of $US90 billion. “I don’t like to own anything I can’t sell right now.”

Created in a Harvard University dorm room in 2004, Facebook rocketed from an online directory created for college students to the world’s No. 1 social network with more than 500 million members worldwide.

The company’s astounding growth and popularity have put some of the internet’s biggest guns on notice – including Google – and have made it the darling of investors seeking to stake out claims in private companies before they go public.

Facebook, the world’s No. 1 internet social network, earned $US355 million in net income in the first nine months of 2010 on revenue of $US1.2 billion.

It is one of a handful of internet companies including Twitter, Groupon and Zynga whose soaring valuations recall the heady days of the late 1990s.

It is questionable whether new investors would realize the exponential growth that early-stage investors got in Facebook, said Oppenheimer & Co managing director Stephen Todd Walker.

That’s particularly true, he said, as the company faces more competition abroad from social networking sites like China’s Renren Inc, which is expected to go public next week.

“For Facebook, the larger you get, the harder it is to have that explosive growth,” said Walker.

Nonetheless, an array of investors has piled into Facebook. Mutual fund giant T. Rowe Price recently disclosed that several of its funds owned stakes in Facebook, valuing the company at $US25 per share, which implies a valuation of $US50 billion.

Yet one hedge fund manager who passed on smaller Facebook deals recently said that, for him, the opportunity to get in on the action had passed.

“By the time T. Rowe Price is investing,” he said, “you know it’s too late.”

Reuters

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SEC probes trading

in private Internet firms: reports

BANGALORE (Reuters) – The U.S. securities regulator is looking into trading in privately-held Internet companies including Facebook and Twitter, media reports said, citing people familiar with the inquiry.

The Securities and Exchange Commission has sent letters to several people trading in the stock of these companies, seeking information about topics that include how such funds are valuing shares of those firms, the Wall Street Journal reported.

SEC spokesman John Nester declined to comment to Reuters on the Journal report.

An emerging crop of online trading services such as SharesPost and SecondMarket facilitate share trading of unlisted Internet firms.

The probe is in a preliminary stage and appears to be partly focusing on funds that have been set up to allow investors to trade in private companies, the newspaper reported.

The regulator may also probe how the existence of funds affects an SEC rule that states that private companies must have fewer than 500 shareholders, or else publicly disclose significant financial information.

This was part of the reason Google Inc went public in 2003, the Financial Times said.

In recent months, the implied value of Facebook has risen more than 50 per cent, while the value of Twitter has more than doubled, the FT reported.

Early employees and investors in private companies have recently been selling their stock to buyers who want exposure to these fast-growing enterprises, the FT said.

(Reporting by Abhinav Sharma in Bangalore; Editing by Derek Caney)

Sourced & npublished by Henry Sapiecha

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