How Facebook will finally make money!

We are looking very closely at Social Media as a part of our Smart Business for Tough Times Event later this month.

We saw a story in the Telegraph which really puts a finger on the real value of Facebook. It is all down to building focus groups for business.

The crux of its value is here.

In an attempt to finally monetise the social networking site, once valued at $15bn (£10.4bn), it will soon allow multinational companies to selectively target its members in order to research the appeal of new products. Companies will be able to pose questions to specially selected members based on such intimate details as whether they are single or married and even whether they are gay or straight.

The proof is here

The power of Facebook, and its members, in driving corporate decisions was illustrated last year, when a campaign on the site led to Cadbury reversing its decision to withdraw the popular Wispa chocolate bar. Cadbury has sold 70m Wispas since it reintroduced the bar in October after the Facebook campaign attracted 40,000 signatories.

So, why will this work? Because everything else has failed!

All the company’s previous attempts to monetise the site have failed after members railed against the site’s invasion of their privacy. Mr Zuckerberg pulled Beacon, a service that notified users of their friends’ purchases on external sites such as Amazon, after members launched a campaign in December 2007.

Mr Zuckerberg said the coming year will be “intense” for Facebook as advertising revenue dries up.

The company has denied reports that it is so strapped for cash that it has been forced to approach Middle Eastern sovereign wealth funds for emergency funding. It has also cancelled plans to allow employees to sell off their shares early because of the economic climate.

Finally, the issue of Banner blindness which is so obvious on Facebook

Rival research company IDC said advertisers are turning their backs on social networking sites because they have a lower “click-through rate” than traditional online ads. Only 57pc of social network site users clicked on an advertisement and made a purchase last year, compared to 79pc on the internet at large.

These are interesting times for Facebook and social media because it will demonstrate the real value of these types of sites. It will also show where these sites have a value in the business day.

Originally posted 2009-02-02 10:38:55.