Face­book has been under enor­mous scruti­ny of late. Of course, there are those who track the site fero­cious­ly, either as ultra-keen Face­book mem­bers or as jour­nal­ists who have been assigned the Face­book “beat”. Then, there is the invest­ing world, which has both favoured and shunned the company’s stock since it became a pub­licly trad­ed asset. On May 18, when the stock went pub­lic, one share cost $38.23; last night, it closed at $20.40.

Com­pa­nies that lose half their val­ue in the stock mar­ket in six months tend to be loved or hat­ed, intense­ly. But, from where I sit, the key ques­tion is this: does Face­book have a future?

On the plus side, it cer­tain­ly seems pos­i­tive when its CEO founder Mark Zucker­berg report­ed Octo­ber 4, “This morn­ing, there are more than one bil­lion peo­ple using Face­book active­ly each month.” On the minus side, the #1 rea­son why the stock is not doing bet­ter than it is can be explained with one verb: mon­e­tise, which means, per the dic­tio­nary: “con­vert into or express in the form of cur­ren­cy.” In oth­er words, Face­book, to suc­ceed, is going to have to con­vert those one bil­lion peo­ple into bot­tom-line prof­its. BIG and con­sis­tent bot­tom-line prof­its.

I’ve been fol­low­ing Face­book for some time; when TV inter­view­er Char­lie Rose inter­viewed Facebook’s Chief Oper­at­ing Offi­cer Sheryl Sand­berg and board mem­ber Marc Andreessen (who was the cre­ator of the first Web brows­er, along with many oth­er achieve­ments), I took spe­cial inter­est in find­ing out how opti­mistic they were about mon­etis­ing Facebook’s poten­tial. The inter­view was part of Inter­ac­tive Adver­tis­ing Bureau’s MIXX con­fer­ence for online ads and was report­ed by Forbe’s Robert Hof, who also includ­ed some of the tran­scribed com­ments from the inter­view.

You might draw dif­fer­ent con­clu­sions from mine after you read the orig­i­nal com­ments, but I found Sand­berg and Andreessen to be hon­est as they tried to nextsense how Face­book could become an Inter­net jug­ger­naut as big as say, Apple or Google. For exam­ples:

  • Andreessen notes how a lot of adver­tis­ing dol­lars are still trapped in main­stream-media buys, less in news­pa­pers (of course) and more so in tele­vi­sion and radio. How­ev­er, Adreessen says mon­ey is now mov­ing vig­or­ous­ly into mobile adver­tis­ing.
  • Sand­berg expand­ed on that thought: “You went from radio to TV and print and then to online. We think Face­book rep­re­sents the next stage of online and we’re still in the very begin­ning. Ads online today are one-time and one-way, no ongo­ing rela­tion­ship. We’re at the very begin­ning of chang­ing that. Busi­ness­es have an oppor­tu­ni­ty to change their rela­tion­ships. They can estab­lish an ongo­ing rela­tion­ship. And mem­bers have 130 friends they can pass mes­sages along to.”
  • Rose asked a crit­i­cal ques­tion, which is how Face­book can prove to adver­tis­ers that their mes­sage is reach­ing many mul­ti­ples of Face­book users, based on just one see­ing a pow­er­ful ad. Said Sand­berg: “We prove it with data. One ques­tion has been, do peo­ple see the ads. Our brand aware­ness is 30 per cent high­er than oth­er ads. It’s not just that peo­ple see the ads, we also ring the cash reg­is­ter. We’ve done 60 stud­ies on sales. 70 per cent of cam­paigns have a 3X pay­back.”

It seems that these two senior Face­book lead­ers believe the miss­ing “m-word” (mon­etis­ing) will be realised by lever­ag­ing anoth­er pow­er­ful m-word: mobile. In my next post, I’ll talk about their thoughts on e-mobil­i­ty as well as a few of my own.

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