news…

People aren’t wasting any time trying to figure out how to monetize all those thousands of Facebook apps that have sprung up over the last couple of months….

I’m aware of the hook-ups you mentioned and made note to some of them in a previous posting off of my blog. (http://www.edwardjthomas.org/?p=10)

I guess the that point I’m trying to make it that for these destination web sites, we should strive to apply some kind of fundamental analysis for baseline valuations. A model doesn’t have to be overly complex, but rather should go farther than unique visitors alone. As the field of web analytics evolves we should be able to apply more rational (I use that term loosely) valuation models to online real estate.

A simple valuation model (as per my previous post) can also aid investors as more destination sites go public. A model that weighs in time spent on site will reduce the likelihood of investors being duped by juiced traffic numbers (through adware, clickfraud, SEO, etc.). The model that I proposed is just a starting point…

There are a few other problems with your model:

A) In favor of a higher valuation for Facebook
1. Those are Youtube’s current stats and not at the time of acquisition. The implied value in visitor hours per day was much higher at the time of acquisition.

2. There are lots of stupid people who will pay a high price for YouTube.

B) In favor of a lower valuation for Facebook
1. YouTube has obvious advertising integration opportunities, Facebook does not. The moment starts targeting messages based on user profiles and demographics, people will start giving less information away. It’s not like Gmail where you have no choice.

2. Grouper was sold for a much higher valuation than your model suggests. Perhaps the slope of the line charting $ value versus total visitor hours per day has a negative first-order derivative implying that as the site gets bigger, it can command a lower value per user.

Either way, it’s an interesting analysis. If “valuations” are done by “how much more should we pay for this asset based on how much Google paid for YouTube, then good for Facebook. If the valuations are based on tangible ability to drive advertising and revenue generation, no comment.

So not to get sidetracked–let’s get back to Facebook. Using my model, Facebook values at $2,930,775,392. Please see my spreadsheet on how I came up with this here: http://www.edwardjthomas.org/u.....nModel.xls

These last couple of lines from your post are a fantastic summary of the evolution of the web, where business (or the ability to become one) acts as a natural selector for a too-wide number of tech species that keep popping out.

Cheers

Sounds like a pyramid scheme.

the whole platrorm will turn into one large-scale shitfest of excessive and lame monetization, and the users will hoof it to someplace else

oh by the way peter thiel is about to make it 0-2 in timing bull markets to shop his companies. paypal could have netted 10x its ipo valuation if it had better timing, and i can assure you that whatever fantasies he has in his mind of fb now, this week’s stock activity yanked $1B off the top

the bear should have one beneficial impact - 75% of the turds floated here are about to get definitively flushed.

Thanks for the write-up. Jay, you’re making it a lot more complicated than it is. Simply put, we have an installed base of 23MM apps on Facebook growing at 500K new installs a day. We have a very high click-through rate on cross-promotion and can deliver between 5K-30K new installs/users per day per app promoted on our network. We’ve been selling this placement for $0.50 CPA and are already oversubscribed. I don’t see what you’re referring to above.

Ro

VP Business Development
RockYou