20 Ways Facebook Can Make Billions

Following up on my article from yesterday afternoon where I suggested that Facebook should begin focusing on monetization, I figured it would be a good time to suggest at least 20 ways that Facebook could make billions. While I'm critical of the company's existing monetization strategy, the company is clearly growth oriented and they are in the enviable position of figuring out a way to make billions of dollars. Below are a few ways that we've come up with for Facebook to make money. Improve Their Advertising Platform Facebook has a fairly robust advertising platform but anybody that has used it knows that the reporting features are significantly lacking. Also it is apparently impossible to modify approved advertisements. There is probably a very long list of how Facebook can improve their advertising platform but it's clear that improvements would significantly boost revenue from the company. Considering that the company was expected to generate around $250 - $300 million last year, $1 billion is easily within reach if they improve their advertising platform. Charge Users for the Service This is something that always gets discussed when discussing monetization for Facebook. This is also one route that Facebook will most likely not take. After almost 6 years of operating a free platform, charging for the service is absolutely ridiculous. What's not ridiculous is providing a value added service but I'm not quite sure what that value added would be. Would it be an email service? Doubtful. What value added services do you think Facebook could charge for? Charge Developers for API Calls When Facebook launched the platform last year they included a sentence in their terms that gives the company the right to charge for API calls in the future. While that hasn't happened yet this is definitely a possibility and a quick route to cash. The only problem with this is that it could become a barrier to entry for new developers. Facebook needs to be as developer friendly as possible if they are going to become the next Google. Charge for Data Services Anybody in the world would love the opportunity to troll around the Facebook databases. While Facebook will never grant outsiders access to much of the private data on the site, they could charge market research companies to have access to anonymous data sets. While this would compete with external research companies, this would be highly profitable. It would also be highly controversial as user privacy would be heavily scrutinized if the company started selling activity and demographic data. Sell Water This was a joke that I mentioned this morning but the point is that Facebook could market practically any product with the amount of traffic they have. Whether it's clothing, food, or any other product, Facebook has one of the largest marketing channels in the world. They could easily use that channel to launch any product. How does a Facebook cologne sound to you? Not sure what it would smell like but Facebook could sell it if they wanted. Fan Gear This goes along with the last item. How many people in the world do you think would wear a Facebook t-shirt? If Facebook set up their own site for buying "Facebook gear", I'm sure they could rapidly sell millions of dollars in gear. While it would be tacky, it would be a pretty sizeable business for one employee to manage. Sell Technology Products I read somewhere today that Google is considering selling a router. I'm sure there are a ton of people that would buy a Facebook laptop, or a wireless router. Technology is a great next step for the Internet company. Then again building hardware is not exactly the company's core expertise. I'm sure Dell or HP would gladly set up a partnership with the company to sell Facebook braded products. Splatter Advertising Everywhere ... Like MySpace While this goes completely against Facebook's core focus on creating a useful user interface, this would be a quick way to generate money if they became money hungry right? While it most definitely wouldn't increase traffic to the site, it would increase the money headed into Facebook's coffers. Fortunately I have a feeling that Facebook would rather shut down the site than see their site littered with advertisements. Robust Polling System You can just about count this one out for now given that Facebook decided to remove the polls product. Market researchers would love to get their hands on the information provided by Facebook users. Unfortunately the first version of this product didn't provide statistically relevant results and the reporting wasn't very robust. If Facebook could have marketers bid for utilizing a large polling program, they'd instantly make millions of dollars every year. Will it make billions? Possibly given that something like 20 billion dollars are spent on market research every year. Why the statistical relevance of Facebook poll responders would be questioned no matter what, this could be a cash cow. Payment Platform for Developers Last year this was just about tossed out the window but at AllFacebook we believe that Facebook will still eventually launch this product or partner with another company to perform Facebook integration. They have Peter Thiel of Paypal on their board of directors and if anybody has experience with online payment systems, he definitely does. Conversely he may have expressed concern about the complexities of launching a payment system. Whatever has been decided, a payment platform could bring in hundreds of millions if not billions. Corporate Facebook Platform Facebook currently lists all of your contacts no matter how you are connected to them. While friend lists already exist to enable you to customize your privacy setting for individual friends, there is no complete "firewall" between your professional and social contacts. By letting users have their own customized version of Facebook that limits them to the corporate side (similar to Google apps for your domain), Facebook would immediately attract the attention of businesses worldwide as a viable solution for corporate content. Will Facebook be launching a corporate version any time soon? Probably not. Dustin Moskovitz, a co-founder of Facebook, left the company reportedly to start an "enterprise level productivity software package". That package could potentially integrate a lot of the social features that currently exist on Facebook. Any details about the company would be complete speculation though so who knows, perhaps Facebook could go down this route. Google makes a lot of money from enterprise packages, why not Facebook? Auction Site This one is a shot in the dark. eBay is theoretically a "social marketplace", so why doesn't Facebook launch a competitor given that they are probably the largest social site on the web? This would be a relatively complex task and given that they've already outsourced their classified service, it's doubtful that the company would ever launch an auction site. If Facebook is going to make billions this would be a great way to get there. VOIP Service Facebook is probably the largest personal phonebook on the web. Why not take it one step further and let people dial of their friends directly with a Skype competitor? There are already tons of applications on the platform that offer this service and Facebook is only a step away from integrating voice services into their instant messaging service. Throw in video and Facebook has a nice Skype competitor. So how would the company make money off of this? Easy. Just charge for users to make calls to ground lines. Skype got sold for billions to eBay and despite the company's disappointing revenues, a competing service could easily add hundreds of millions in annual revenue to the company. Faceworld - The Virtual Facebook I'm not quite sure how Facebook would make a lot off this but I decided to throw this in there for all those Second Life fans out there. Virtual worlds are a hotly debated topic. Those virtual worlds that integrate gaming, such as Zynga's Yoville, have proven to be a relatively profitable business. Is it worth billions? I'm not sure about that one but I'll leave that for the readers to decide. Online Bank Since we're in the midst of a global financial crisis, why not capitalize on the opportunity to give consumers a new "bank of the future"? There have been no rumors of the "FaceBank" but we'll throw this one in the pot with the 19 other ideas we have. Whether or not banking is the best industry to be in right now, there is no doubt that banks generate a lot of money. With a lack of confidence in our financial system, now would be the time to launch an innovative new banking system. This could include person to person lending, or other alternative banking models. Whatever model Facebook would choose, there's no doubt that banking could generate a hell of a lot of money for Facebook. Cloud Storage Facebook has already released a data storage service for developers but it's still in Beta. Amazon S3 has been relatively profitable in the short-run but in the long-run this is a never ending cash flow source. Once people put data in, they tend to keep it there. Cloud computing is the wave of the future and there's no reason for Facebook not to participate in this game. Is this the best billion dollar idea? Probably not but it's not a far reach of their existing platform. Launch the Facebook Internet Right now we navigate the internet through a hierarchical network of computers. Why not make the path for packets more efficient by navigating the social graph rather than the existing network? This is a far fetched idea and I'm not even sure that it's technically feasible but Facebook may provide a more effective way for navigating the web (e.g. finding the shortest routes to an end point via our social connections). Rather than other computers giving us routing information, let Facebook provide that information and charge the internet providers for that service. Launch a Music Service There have been rumors of a Facebook music service for years with the most recent rumors suggesting a potential partnership with other music startups. What appears to be most clear is that nothing is currently clear in regards to Facebook's music venture. It's definitely something that they're interested in though. How a deal would be structured is completely unknown but ideally Facebook would like to provide free streaming music to all its users. Would it be ad supported? Possibly. There are many possibilities and Facebook would hold a lot of leverage with their 150+ million users. Offline Marketing Integration Want to know more information about the customers entering your store? This isn't exactly science fiction. Through basic integration with Facebook Connect, companies can know more than ever before about customers walking into their store before they even interact with them. Such an opportunity has amazing potential and would instantly generate billions for Facebook. If Facebook doesn't do it, an external company will. Why doesn't Facebook launch it before anybody else? The Facebook Phone We wrote about the first "Facebook phone", but it wasn't a Facebook branded phone. Instead it was a company looking to take advantage of Facebook's massive brand recognition. We believe that Facebook should release their own iPhone competitor that would automatically manage all of our contacts. Facebook is currently best suited for optimizing our contacts, so why not give them control of all of our mobile contacts? When your Facebook friends update their phone numbers, it will be broadcasted directly to your phone. While the Facebook iPhone application already accomplishes this, we believe there is a huge opportunity to sell their own device as well. Any Other Ideas? We've listed out 20 ideas but I'm sure there are many more. The bottom line is that Facebook has an amazing opportunity in front of them. All they need to do now is take advantage of that opportunity to make some serious cash. While $300 million is a great start, we know that Facebook has the opportunity to make billions. What do you think the best model is for Facebook to generate billions?

Social Commerce

20 Ways Facebook Can Make Billions

Nick O'Neill

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