Facebook gets Micro-investment

October 25th, 2007

Microsoft has paid $240m (£117m) for a 1.6% stake in Facebook. This may seem like a mighty price for such a small stake, but it is important for two reasons.

1. Microsoft has beaten Google to the punch, securing a stake in the fastest growing social network in the world, as confirmed by ComScore’s figures below:

2. Microsoft, which already provides banner advertising on Facebook US, has now secured long term international advertising access to one of the largest (50 million active users) social networks, becoming the exclusive third-party advertising platform partner for Facebook.

It is important to remember that as social networks become increasingly popular, many people are using their accounts as their door way to the web. Microsoft recognises that if its advertisers have access to these user’s through their web gateway - then the opportunities to sell are enormous. Furthermore, thanks to the user information provided through Facebook profiles, advertising can be targeted more precisely than most other online advertising channels.

Google knows this better than most and its charge to monopolise the online ad sector has taken a significant hit with this announcement. Although I don’t think they will be unduly concerned due to their considerable headstart in the sector.

This deal also answers one of the hottest valuation questions on the web today. How much is Facebook worth? The answer: $15 billion or £7.3bn…currently. This is why Facebook turned down Yahoo!’s $1 billion bid last year.

Not bad for a social networking site that started in a university dorm room less than four years ago, and hasn’t broken even yet.

The BBC has the full story.

Technorati tags: microsoft, facebook, google, online+advertising

Posted in Blog, Industry events, Social media, Social networking | No Comments »

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FT raises the stakes

October 2nd, 2007

Following on from my earlier post about Rupert Murdoch’s suggestion that the WSJ will drop its online subscription policy, it seems the FT is quickly following suit.

As you may have seen yesterday, the FT announced it will be partially removing its own subscription charge, offering free access for the first five articles, with registration required for up to 30 free stories per month.

Interestingly, The FT’s publishers, Pearson, believe that the new model supports both advertising growth and subscription growth, but the point of offering more content for free is surely aimed at allowing advertisers to better target FT.com’s users.

And why not, the growth of online advertising continues to better all predictions. Just today, the IAB’s figures have confirmed that the UK’s online advertising sector, which has overtaken the direct mail sector, should be worth £2.75bn by the end of the year. The FT and WSJ will surely want a bigger slice of that pie.

The competition between the FT and WSJ is well documented, and once Rupert Murdoch is in control, (probably by the end of the year) I expect the transatlantic financial paper battle to step up a gear. Could this be the first battle ground?

Technorati tags: ft, wsj, subscription, online+advertising

Posted in Blog, Content, Digital communications | No Comments »

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