Facebook Monetization: Interesting, Early and At Least Well Conceived

So Facebook is finally launching a dedicated strategy to give its users a chance to access to the physical commercial world. Using its strength in Social Data collection it’s aiming to be the Amazon for Gift Giving. Not a bad place to start in concept.

My first reaction to the article belpw was to close my account and disappear forever. The more personal and financial data Facebook collects the more vulnerable my personal data becomes the target of hackers.

While I’m not ruling out changing my status to “Gone”, I am curious to see how this plays out.

This seemingly strategic and thoughtful approach, however gruff, is actually the right first step in the direction for a company whose culture was built on not monetizing the network which has a penchant for it annoying but not direct commercialism through ads.

A smarter first step would have been into the gift card or software (games, apps, productivity) business, items you are more likely to buy an acquaintance which is what most old friends on Facebook really are. Sending your buddy Joe from high school a cupcake pop is probably a bit personal, even if it is the gift HE wants.

In addition Facebook has been riddled with privacy and data security concerns. Do you really want them storing (by default) you credit card info and to have your home address on file. After all, with all those pictures of your kids up do you really want them to know where you live, beyond proximity?

All that said, I can’t see how in a decade of success with this new offering that Facebook catches up to its IPO valuation of $100B. At 15% on gifts alone, the estimated profit share on each purchase, a billion dollars in sales would only GROSS $150M dollars. They would need $5 – $10B in sales to make this a billion dollar business.

What’s more, the street may eventually be appalled to realize that hundreds of millions of reported Facebook users are nothing more than hackers and bots trolling for personal data. Such a revallation could be concluded from assessing the uptake of the gift platform. And this would only lower the revenue prospects for Facebook.

It’s an interesting dance Zuckerberg is doing. He’d better be ready to accept the commercial value of digital goodwill.

The Street wants its money back but they will be happy to see the company go bankrupt if they can’t earn early losses back. If capital markets can’t make money on the IPO, Investment Banks will make it on the backend through restructuring.

Status: Suspect but still online

CNBC.com Article: With a Billion Birthdays on File, Facebook Adds a Gift Store

The stock holdings of Prime Minister Wen Jiabao’s relatives took a solid jump after Ping An was granted a waiver to a rule that big financial companies be broken up. The NYT reports.

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