Bangalore: The Facebook IPO was valued at a whopping $ 104 billion. It comes as a surprise for most of us when a company that generates a revenue of $5.8 billion is valued so high. The sole reason for this could be the market’s undying faith in Zuckerberg and company to come up with new ways to monetize the site that has over 900 million users. With Facebook having the attention of an average user for about 8 hours a month they have a deep insight in the psyche of the user which can serve as valuable information for advertisers. Here is a list of six multimillion dollar businesses compiled by VentureBeat, which Facebook can look at to justify its sky high valuation.
1. Search:
Search is one sector dominated by Google. Google’s primary business is search advertising and the company has a mighty good control over this sector. It would be a little stupid to expect Facebook to compete with Google head-on. But as we know Facebook has an upper hand in user information and preferences. A recent survey by comScore found out that an average American Facebook user spends eight hours on the site per month as compared to two hours spent on Google.
Facebook can focus on search terms that can have commercial value, such as clothing or travel. Facebook is uniquely positioned to serve taste-based search terms based on the data it already has on its users. So it is evident that even though the ‘search’ sector is ruled by Google, Facebook still has a huge potential in the sector.
2. Person to Merchant Payments:
Facebook can venture in the person to merchant payment sector in Countries such as India; Indonesia etc which are largely cash based economies. It would be easier to set up camp in such nations as compared to United States where going up against Visa, MasterCard, AmEx, and Discover will be incredibly difficult. And Facebook is more likely to rule the market since the basis of commerce is trust and Facebook as a brand is trusted by over 1/7th of the world’s population.
3. Person-to-Person Payments:
The most important thing a company needs to venture into the person to person payment sector is its presence everywhere. There are a lot of companies in the US such as PayPal, Amazon, Chase, Citibank, and American Express that are trying to get a hold of this sector but they all lack in ubiquity. Facebook is probably the only site with its unique position where it is present everywhere. This makes person to person payment sector a win-win situation for Facebook.
4. Social Commerce:
When one has to plan an event the biggest challenge is to co ordinate with a large group of people at a time. Sites such as groupon and eventbrite have ventured in this sector but none of them possess the unique user insight that Facebook possesses. With its large user base Facebook can help in planning event. Facebook has the data and the network to effectively suggest things that you might want to do with your friends. It could also help organizations in every step of event planning ranging from marketing to inviting people and receiving conformations. Facebook has all the solutions you are looking for.
5. Local Businesses:
Local small businesses in smaller parts of the world do not necessarily have the infrastructure or time to maintain websites to cater to their customers. Facebook allows users to create profiles and pages for businesses and organizations. This provides such users a strong positioning on the web. Facebook can bank on such businesses that use Facebook to interact with existing or potential customers. Here too Facebook will benefit from its humungous user base and insightful user information.
6. Television:
Facebook can successfully influence what people watch on television. The big bucks in advertising still focuses more on television and Facebook can easily divert traffic to content providers. A lot of the content on Facebook can actually displace some TV viewing time if presented correctly on the big screen.