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With growth slowing way down, how will Facebook make money off us?

Molly Wood Jun 12, 2012

With growth slowing way down, how will Facebook make money off us?

Molly Wood Jun 12, 2012

Facebook has grown just 5 percent in the last year in terms of unique visitors, according to new research. That’s way down from previous years. If someone was going to join Facebook, they probably already have.

Which throws a wrench into the Facebook business model, which is based on advertising. “Facebook needs more revenue and more profit. The easiest way for them to do that is to show you more ads, whether you like it or not,” says Ben Edelman of Harvard’s Business School. He says your Facebook will get more commercial: “Expect more ads with pictures, not just text. Expect ads with graphics and animation. Expect ads that are something outside the norm.”

Thing is, Facebook ads, no matter how snazzy, may simply not work. Catherine Tucker is with MIT’s Sloan School of Management and says “The click-through rates are reasonably pitiful right now. Some of my own research, we have these instances where you have 20,000 ads, two people clicking on them, and that’s probably not enough to support any growing company in the long run.”

Tucker sees Facebook getting smarter, more like Google, serving fewer ads that are more targeted. “The problem with Facebook advertising right now is that in some sense, Facebook has not worked out what kind of advertising actually works or is actually meaningful or useful for its users. So, I think what we’re gonig to see a switch to if Facebook is able to do it is advertising which is in some sense more useful, more relevant, less wallpaper as it is right now.”

Then again, why have ads at all? Vasant Dhar of the Stern School of Business at NYU argues that it would be better for Facebook and its users if we could all get paid.

Vasant Dhar: Facebook has such a gigantic user base globally, many of whom would be perfectly willing to make some money in exchange for either providing information about themselves or doing surveys and things like that. So, as an example imagine that Nike wants to do a survey of runners over 40 in South Africa and is willing to pay 10 bucks each to answer a few questions. Facebook has a platform that’s ready to do that

Moe: So, if Facebook would be facilitating this kind of thing, they would be the broker between a corporate client like Nike or Coca-Cola, whoever else it is, would they then take a commission?

Dhar: That would be the idea, that they become a clearing mechanism, and Facebook would similarly take a cut of the transaction. At the end of the day, it’s a more efficient way of matching buyers and sellers.

Suddenly Facebook becomes a part-time job.


Time for a Robot Roundup: An update on our mechanical pals.

Robots are chasing us. Or we are chasing robots? Your choice when it comes to Joggobot, an autonomous flying drone for jogging. Set it to fly in front of you so you chase it, dangling-carrot style. Or it can pursue you in a menacing fashion. Up to you.

Robots are imitating cockroaches. Researchers at Berkeley wanted to learn from how roaches can skitter away and seem to disappear. Spoiler alert: roaches hang upside down on ledges. They built robo-roaches to be used in search and rescue operations. Or the freaking out of me.

And ever wonder why big companies have so many Twitter followers? Who follows Coca-Cola’s Twitter feed? Well, robots do. New research indicates up to 46 percent of a big brand’s followers are bots, programs designed to act like real people. When you can’t get real fans, you make robot fans.

Oh robots, how could you?

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