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by joeblau 5143 days ago
Amazon also has a multi faceted business model. Distribution, SaaS and PaaS offerings, Hardware sales, and probably some more I'm overlooking.

Facebook sells ad space to people on their chat platform that have little to zero intent to buy. The last time I saw a company (AOL) try to stuff ads in a chat client... well we all know how that went.
1 comments
nikcub 5143 days ago
But Facebook has already managed to do something that Google hasn't: have more than one source of revenue

Facebook have a shitty ad product and it still generates $4b p.a and climbing, imagine how good they would be if they actually figured this stuff out

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ajross 5143 days ago
I don't understand that at all. I assume your point is that Google only makes money from "ads", and that makes it a single source of revenue despite being well-diversified advertising products across a big segment of the tech industry (Youtube ads aren't the same as search ads, which are different from Android ads, etc...)

But... how is facebook any different? They have ads. And... more ads, as far as I can see. What's the "more than one" source of revenue you're referring to?

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sanxiyn 5143 days ago
Facebook has ads and Facebook Credits. S-1 shows about 18% of Facebook revenue comes from Facebook Credits, so Facebook is better than Google in "diverse source of revenue" metric.
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ajross 5143 days ago
That's fair; I didn't realize the fraction was so high. So, I guess the question then would be do freemium sales by affiliated apps constitute a meaningfully "diversivied" revenue stream? I'd argue that they don't, honestly. Downturns in the market that reduce eyeballs will hit them both. Both scale more or less directly with disposable income in the facebook user demographic.

Normally you talk about diversification in the sense of risk management: i.e. "It's OK if the social media market tanks because we still sell phone service." (or whatever: hardware, concert tickets, coal mine permitting services, etc...).

From that perspective, both Facebook and Google are very exposed. Though if anything I'd still say that Google is better situated due their presence in pretty much all of online advertising. As long as there is anything worth advertising to someone on the internet, Google has an answer for that.

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joeblau 5143 days ago
Google sells Hardware, Software, SaaS, PaaS and Ads.

HW: Google Search Appliance, Google Nexus SW: Google Earth Pro, Google Sketchup Pro SaaS: Google Docs for Business, Google API's (Maps, Google+) Paas: Google App Engine Ads: Google Ads

I know that 96% of GOOG's 2011 Revenue came from Ads, but GOOG is at least trying other markets. I personally wouldn't be surprised if FB released a phone.

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Drbble 5143 days ago
Google has sold its last copy of. Sketchup http://sketchupdate.blogspot.com/2012/04/new-home-for-sketch...
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rehack 5143 days ago
>and it still generates $4b p.a and climbing, imagine how good they would be if they actually figured this stuff out

Please also consider a counter case, what if $4b revenue i.e. roughly $4 per user per year, is the best you can have for such a product. And the potential for growth of no. of users is not high, then what?

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sanxiyn 5143 days ago
This seems very strange to me. There are social networks monetizing at much higher ARPU. Why is Facebook different?
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