Is Facebook Desperately Seeking Monetization?

Do we need a new business model for monetizing on the Internet?

Barry Diller, while being interviewed by the WSJ on the break up of IAC, pointed out that social-networking advertising is currently a big headache and methods are yet to be found to make it effective –

will that get figured out? I absolutely believe it will. What form will it take? Absolutely unknown.

It seems Facebook is still grappling with the right algorithm as well. The company’s COO and ex-Googler, Sheryl Sandberg stated at the American Magazine Conference in San Francisco yesterday –

“The monetization question on the web is a very big and open one.”

The holy grail, according to her, is “demand generation” and she’s calling for a new model and metrics.

John Furrier believes Sheryl needs to focus more on being a product leader and landing key business development deals – both things that MySpace has excelled at – rather than worrying now about monetizing.

I’m not quite with John yet. I believe that Facebook, and others in the industry, should be starting to think very seriously about what business model they follow.

We are definitely entering a phase when advertising growth slows. I’ve had this view corroborated by a number of very smart people on Sand Hill Road, including folks like Jeremy Liew at Lightspeed Venture Partners, and companies who totally rely on advertising for revenue are going to do it tougher for a while.

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3 thoughts on “Is Facebook Desperately Seeking Monetization?

  1. Pingback: Facebook COO Sherly Sandberg Desperately Looking For An Ad Model « - Business & Technology Blog

  2. Rand,
    If Facebook doesn’t know what their business model is they are in trouble. They are in the advertising and ecommerce business (sales and transcation) – translation anything around the notion of “conversion”.

    If Sheryl can grok that then she can lead the team over there but if she can’t she will blow it for them. The key to success is in the platform side of their business. They should focus all their energy there and stop chasing a online ad model ghost. Get the users base up to 200m+ with a robust scalable platform then the rev model will show up at their proverbial doorstep.

    With the platform being so important I’m concerned around the exit of such prominent engineering talent..Major red flag

  3. worth thinking about, if its ok with you I will quote you in a post I’m intending to create. I advise companies in Tenerife and here we have our own challenges. Some of the key issues being that we are a log way from the mainland and so local knowledge, materials and goods all must be brought in from abroad. There are also a many bureacratic problems that owners of businesses have to surmount. Despite this it’s a beautiful place to live and it’s a only an irritating inconvenience. The web is a great help… I’ll return to take another look at very soon!

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