Companies & Industries

Can Facebook 'Monetize Eyeballs?'


Can Facebook 'Monetize Eyeballs?'

Photograph by Caroline Purser

In the days of the Internet bubble of the mid to late 1990s, companies received millions of dollars of venture capital to offer products that weren’t especially good—but were free. The pioneers planned to make money by “monetizing eyeballs.” The dream of advertising revenue hadn’t yet emerged, so the thinking was that if these companies could gather enough users (eyeballs), they would be able to sell those users new products in the future. But there was no plan to get there.  Without a road map, most of these companies faded away as the venture money that had fueled their growth dried up.

Fast forward to 2012 as Facebook (FB) goes public, proclaiming it has captured a billion eyeballs and therefore is worth hundreds of billions of dollars. The initial reaction to Facebook now that the veil of mystery has been lifted has been disappointment. That’s not just based on the messy initial public offering, but on the sudden realization that monetizing a brand isn’t as easy as it might look from afar.

While there are many reasons for Facebook’s unsuccessful IPO, the primary one has to do with how a company can “monetize eyeballs.” As the ’90s entrepreneurs discovered, just having the attention of a large group of participants doesn’t mean they are willing to give you money. In the case of Facebook and other social-networking sites, the expectation was that consumers would live in that world and trust advertisers who paid real cash for access. In reality, Facebook’s problem is simple: Of those billions of eyeballs, how many hang out in the Facebook world? Many are “Facebook voyeurs”—people who check the network without any real engagement. I wouldn’t be surprised if as many as half of Facebook’s users fit into that category.

Facebook faces three problems as it works to reposition the network as more than a place where people post family pictures. First, it has to become viewed as a real company with significant intellectual property. Second, it has to become a trusted partner to consumers—who are its product. Third, Facebook needs to create a platform on which the consumer wants to live and work.  This will be a difficult transition for Facebook, just as it was for dot-com companies less than two decades ago.

Hurwitz is CEO of Hurwitz & Associates, a research and consulting firm focused on emerging technologies. She is the author of Smart or Lucky? How Technology Leaders Turn Chance Into Success, and has co-authored six Dummies books including Cloud Computing for Dummies and Hybrid Clouds for Dummies. Her latest book is Hybrid Cloud for Dummies. Follow her on Twitter: jhurwitz.

Steve Ballmer, Power Forward
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Companies Mentioned

  • FB
    (Facebook Inc)
    • $78.37 USD
    • -0.32
    • -0.41%
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