The Monetary Value of Facebook
March 19th, 2008By Susan Iskiwitch
Therese Poletti at MarketWatch has posed an interesting question: Will America Online’s $850 million deal to buy social networking company Bebo alter the valuations of social networking firms, specifically Facebook? Bebo, the second largest social networking site in the United Kingdom (and the fourth in the USA), receives around one third of the traffic of Facebook.
Facebook has been valued at $15 billion, but with Bebo’s price of $850 million, will Facebook’s valuation be lowered?
I have heard people talk about how they’ve “quit Facebook,” because of the clutter of user-created applications and lack of substance. Personally, I prefer the look and simple features of 2004’s Facebook (from when I first joined) with the contacts I have on today’s Facebook (four years ago, I could have never imagined having my dad and my boss as “friends”). The benefits Facebook provides me are so large at the moment (networking, keeping up with old friends, client outreach), I can’t imagine “quitting.”
Social networking is becoming the traditional method of networking, and even if the survivors of the space will be less than 10 (according to Harry Wang, a senior analyst at Parks Associates), and even if “advertising standards have not yet been set that could help determine valuations,” I think the value to a potential buyer will be based off of the benefits users find in the service; and for Facebook, at least for the foreseeable future, the benefits are gargantuan.
