As a recent post by Robert Young at GigaOm brings up, was Facebook “Smart or Stupid” by not taking a buyout offer in 2006?
Traffic is up according to Alexa, so one might think they made the right move and are worth more today than they were in 2006. And what’s not to think that traffic won’t keep going up as there are more college students every year, and now that Facebook is open to non-college students they can stick around after graduating.
However, what good is that traffic if you can’t monetize it well? Robert Young’s piece reports that Facebook isn’t having a ton of luck in this area. If this is true, I see two things happening over 2007. First, they’ll prove that it’s hard to monetize their traffic extremely well, as has really been the case with social networking traffic thus far. And second, social networking won’t be as hot as it was in 2006 when it was really the new and exciting kid on the block. Once those two things happen, will those huge buyout offers still exist? Probably not.
Of course, there are a lot of companies and people working on monetizing social network traffic better, so it’s quite possible that strides are made there. And if Facebook continues to grow and dominate their space, then maybe. But the numbers being thrown around in 2006 were pretty high, so I think they may regret not taking one of those deals when it’s all said and done.
This can be good for us here.