Would you pay to use Facebook? – 11492

20th April 2012

According to TBG Digital's Global Facebook Advertising Report, the average CPM – a key unit in advertising which measures the cost per thousand clicks – has risen by 41% in the last 12 months, including 15% in the last quarter. Meanwhile, the average amount of money companies pay to get a Facebook user to "like" their page has jumped by 43% in the last three months alone.

The rise in advertising revenues come at a crucial time for Facebook, which is under pressure to demonstrate that it can monetise its global reach as it gears up to make its initial public offering next month.

ADS ON FACEBOOK: COMING TO A WALL NEAR YOU?

facebook wall

The social network, which last week shelled out $1bn (£627m) for Instagram, the photo app, is to go public on May 17th, according to multiple sources.

As TechCrunch points out, with 27 million users on Apple's iOS platform alone, Instagram was becoming a social network of sorts already. Instagram didn't have much revenue to speak of, but it was on track to get 50 million users. "And with that kind of momentum, Facebook felt like it had to move — fast," Josh Constine writes.

The world's biggest social network is expected to seek a $100 billion valuation in its IPO – the most anticipated stock offering from Silicon Valley since Google Inc went public in 2004.

Some sources say that Facebook will seek to raise $10 billion from an initial public offering of shares – others say that the social network will seek a smaller sum. The flotation will vault Facebook into the ranks of the largest public companies in the world, alongside the likes of McDonald's, Amazon.com and Visa.

But what then? Could the next stage be a ‘premium' service that users have to pay for alongside a string of advertising? After all, many of us log on to Facebook every day as part of our routine, as we might read a newspaper – and if newspapers are starting to charge for online access, why not social networking sites?

Traditionally social networking websites have had a lot of advertising imagery but haven't been able to get the same high rates as the premium content sites, so this might be the next stage once the IPO is out of the way.

However, there is competition from companies such as Google+, which provide similar services but are likely not to charge because they are less powerful in the social networking space. But does this mean that social networking will remain free?

What do you think, and would you be prepared to pay?

 

More from Mindful Money:

LEAKED: Facebook's plans to monetise your profile

What could Simon Cowell teach Facebook?

Instagram: A changing investment landscape?

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The Financialist

22 thoughts on “Would you pay to use Facebook? – 11492”

  1. Realfinney says:

    Hi Shaun, long time lurker, 1st time poster with today’s music reference from The Bloodhound gang:
    The trick is only pick on those that can’t do you no harm,
    like the drummer from death Lepparda only got one arm.

    1. Anonymous says:

      Hi Realfinney and welcome to the comments section
      I had never heard of the Bloodhound gang so this will be a job for You Tube or Spotify…

  2. Ln X says:

    Bingo Shawn, nominal GDP is a sham, what good is an inflated money supply without the demand to back it up? The rapid growth from the 70’s, 80’s, 90’s and up to the late 2000’s has been primarily inflation driven combined with an ever increasing money supply. Everyone only thinks they are richer because essentials of modern life (power, water, cars, computers, mobile phones) have become cheaper over the years. More like relatively cheaper when you consider inflation.

    Small wonder £100 in the 70’s equates to a few thousand pounds worth of purchasing power today!

  3. Drf says:

    “Let me nail my colours to the mast, they do matter but any analysis has
    the issue that the recorded numbers are often shockingly inaccurate.” Therein lies the nub of it all. The main reason the “recorded numbers” and all government statistics are now so shockingly inaccurate is of course because they are deliberately manipulated to attempt to show a different scenario from the truth!

    “So there is my conclusion for today and I will put it simply. They
    intend to inflate mate! The fact that such efforts have such a dreadful
    past record in the UK seems unlikely to deter them as they mutter to
    themselves another phrase with a dreadful track record. “This time it
    will be different”. ” Of course it will not except that it is going to be much worse than before! That is the result of Zimbabwe economics implemented by those who ought to know better.

    1. Anonymous says:

      Hi Drf
      There were a few inconsistencies in this data. For example we were told that real incomes had risen by 1.9% in the second quarter which does not fit well with the other data we get. For example real wages are falling and it doesnt seem likely there is more money/interest fron savings…..
      This bit does not sit well with it either.
      “In current price terms, compensation of employees rose by 0.2 per cent in the second quarter of 2012, revised down from a previously estimated increase of 1.2 per cent”

  4. Anonymous says:

    Nominal GDP targetting is a fraud. Real life is biology. Biology has feast and famine – it cannot be managed into a stable output. This translates into economics as boom and bust.

    Economies heavily influnced by commodities prices will see significant ups and downs. Bernie Madoff claimed to have beated economic volatility with his stable dividends ….

  5. DaveS says:

    Thanks Shaun – why don’t we see this kind of analysis in the mainstream press ?

    Wolf has infuriated me for years – I feel him and his cohorts share a lot of the blame for what is about to unfold – they have provided the academic fig leaf to this Madoff economy we have.

    The current account deficit tells the real truth – we simply have not been paying our way in the world – even with the benefits of North Sea oil and a massive boom in finance. We have maybe 8-10 good years of oil left and a badly damaged City of London – what will that do to our trade figures ?

    The trade figures were ignored because it didn’t matter – we could simply borrow the money to buy imports. Works great until the lenders decide very rationally that they probably won’t get their money back. Then what – we print and we inflate.

    But as you have pointed out, you can’t grow a consumer economy if real-incomes are dropping fast. It also means private debt is not being inflated away. They need to release wage inflation – I think nominal GDP targeting is code for that. Of course George & Mervyn can’t allow this, but Mervyn retires on his index linked pension next June and wage rises will be perfect for a new populist Labour chancellor. The heavens are aligning.

    It seems inevitable to me. The question is once we’ve emerged from bankruptcy what position will we have in the world. I read that China creates the equivalent of a Greek economy every 11 weeks – they add 1 million new vehicles to the road every month – on average (GDP per capita) they are still poorer than Bulgaria – 100’s of millions still live in poverty – what happens when they release their own population inflation and end the 1 child policy ?

    And China is just part of the story – the world is shifting.

    1. forbin says:

      Hello DaveS,

      totaly agree on the trade balance – we’ve coasted along with North Sea Oil and Gas and that period is drawing to a close

      We’re left buying oil and gas in the market place now – with not a large manufacturing sector to support us anymore.

      Finance is becoming a joke now – fortunately I think we have a little room left as the PIGS seems to pre-occupy the markets – The USA of ofcourse is still the defacto petrol currency for now.

      so what are we good at ?

      The clowns in Westminster seem intent on just throwing pies at each other these days instead leading the country….

      Forbin

      1. DaveS says:

        Well thats a good question Forbin – what are we good at ?

        Well world leaders in big ticket services – banking, insurance, law, architecture, education. Shame about the banking. And a lot of my foreign colleagues weren’t too happy with their UK university experience either – so they best be careful.

        Then I would list aerospace (Typhoon, Airbus wings, Rolls Royce engines). Trouble is Typhoon has been an export disaster – wrong plane at wrong time. Airbus is state supported success perhaps ?? Rolls Royce is one our blue chip companies for sure.

        Then oil/gas & its twin petrochemicals – not looking so bright for either of these.

        Pharmaceuticals – big ticket, but small employer – not many people needed on a pill production line. Given that half the universities can’t be bothered to teach Chemistry, then I wonder about its future. Seems labs are easy to move to far east.

        Shipbuilding – otherwise known as 2 totally useless nuclear carriers at £5bn a pop each and counting.

        Car manufacturing – a rare bright spot – Range Rover selling bucket loads to Chinese & Indians – not so sure domestic demand will hold up though.

        Alcohol and junk food – whisky is big export – rightly so.

        The classic consumption sectors – retail, construction, property, tourism.

        Then IT – Arm, Autonomy (unless HP kill it), can’t think of other leading software company (even though its my industry – Sage, few remaining games makers ?).

        And of course folding bikes………

        I am sure I’ve missed loads – what else is there ?

  6. Anonymous says:

    If the problems of macroeconomics could be waved away so easily then monetarism would have worked.

  7. Rods says:

    Hi Shaun,

    Another excellent blog, you analyse and blogg on things that are never reported elsewhere. Keep up the good work it is appreciated.

    My feeling for a long time is that CPI understates quite considerably inflation with RPI a little better. The nominal GDP figures seem to confirm this or am I missing something?

    The reason I asked the question the other day about people sending money to families abroad and also the repatriation of profits, was because of what is happening to the UK economy trade figures, these figures are going to get a whole lot worse due to:

    1. Declining Oil and Gas output.

    2. UK industry used to be a net global investor, now this is a deficit. So as more UK companies are taken over and their profits repatriated then this will make the figures worse.

    3. Immigration most of people I know that have migrated to the UK, send money home, a joke is that the biggest investors in India are UK Indian Restaurants. Now as a high wage relatively rich country it makes perfect sense to do this for the higher wage and job opportunities, if someone lives in a much poorer country. However if you are British, highly skilled and mobile then the opposite may is true, where you keep more of your income, by paying lower taxes and therefore have a lower overall cost base (Jenson Button and Lewis Hamilton as two examples), hence the more they tax the wealthy, the more they will off-shore, being replaced by lower earners from abroad. This along with red tape also applies to companies, hence the popularity of Asia and Eastern Europe for manufacturing, IT, accountancy and call centres.

    Personally, I think the balance of trade trend will continue to deteriorate because of the above. Still in a few years time when the UK needs to be bailed out by the IMF, at least we will be able to do so under the IMF’s original remit, unlike the Eurozone bailouts!

    To me this is groundhog decade, 1970’s all over again. With high taxes, excessive and out of control Government spending, a double dip recession and depression, profit and enterprise are dirty words again, a fractured and jealous of success society, rampant inflation and as things get worse and worse the UK will end up going to the IMF with their begging bowl again.

    To set the trend my records for the day are from the 1970s and are for Spain and Greece: Can the Can by Suzie Quatro

    Can the can
    Can the can
    If you can
    Well Can the Can

    and from the populous to western politicians and central banks: Amateur Hour by Sparks

    Amateur Hour goes on and on
    When you turn pro you know she’ll lets you know
    Amateur Hour goes on and on
    When you turn pro you know
    She tells you so

    1. DaveS says:

      The IMF bailed us out with 2.3 billion in 1976 – about 15 billion in today’s money (I think – can that be true ?). Now I know it can be expressed by the favoured %GDP trickery (GDP is just another fake inflated measure) but whatever way you look at it – this is pocket change today. Mervyn could print that much on his inkjet before breakfast. It wouldn’t even cover the monthly national deficit in a bad month.

      They have let the debts to build up to such ridiculous levels that I don’t think the standard IMF bailout recipe -(austerity, devaluation & couple of years punishment in the sovereign debt wilderness) – well it just can’t work any more. They couldn’t handle the UK – never mind the other PIG dominoes and lets not mention that other bankrupt across the Atlantic.

      Last time the IMF stepped in after the UK had finally had enough and decided to try and put the inflation genie back in the bottle. This time the inflation genie will be far too big and nasty to squeeze back in – I very much doubt that our great leaders will be able to control it.
      Ping….

    2. Anonymous says:

      Hi Rods
      We do have plenty of coal and we do have shale oil reserves. I am not an expert on fracking but I suspect that sooner or later we will go down that road. As to the coal reserves of all the debates and mud slinging that goes on concerning the Thatcher years I have always thought that the decision to abandon much of the coal reserves was a mistake. I am not talking about the Scargill/Thatcher fight simply that some of the reserves needed some maintenance to keep them open for the future and that was abandoned…

  8. geoffk says:

    hearing the spanish bank stress tests due at 17:00 bst will say €100-150 bln is necessary, higher than the €60bln mentioned

    1. Midge says:

      They say its 60bln euros.Will this be the first tranche?

      1. geoffk says:

        Or the last one before meltdown?

      2. Anonymous says:

        Hi Midge and Geoff
        Yes although I guess that they decided not to to exactly for the estimated figure and go for 59.3 billion Euros which after allowing for factors such as deferred tax assets- yes really- becomes 53.7 billion.
        There are however,ahem, some inconsistencies as Santander and BBVA for example have more cpaital under the adverse scenario than the baseline. The Mad Hatter has been holding another Tea Party….

  9. RedBanner says:

    Excellent post Shaun. Surely they are already at this?

    On the other hand will the inflation ever come?
    Hmmm. Surely once the markets loose faith in UK PLC’s ability to pay its way the interest rates will have to rise to defend the value of sterling? (Soon after the Government’s Autumn statement?)
    Now if that happens the home repossessions will start in earnest in 6,12 or 18 months and deflation will swing in to play?
    Or will the UK’s banks just fold and those that can will walk off with what they can carry?
    To be terribly Daily Telegraph can we have falling house prices and rising inflation?
    Have a nice weekend everyone.

    1. Anonymous says:

      Hi RedBanner

      We have had some inflation so far in the credit crunch era and whilst it has been at levels much lower than past peaks it has been pronounced if you consider our weak economic performance. As to future issues if history is any guide than the analogy is that of a brick on a piece of elastic. It gets pulled back and back and then twang it comes flying past you……So in some ways the longer the wait the stronger it may be.

  10. JW says:

    Hi Shaun
    Yes they are targeting nominal GDP because they want inflation. Yes we will all ( except for the 0.1%) become worse off by 30% or so. Yes productivity is decreasing because of increasing part-time work.

  11. DLinneridge says:

    Hi Shaun,

    Excellent input, possibly for me one of your best.

    There are a few apocryphal websites around, sounding doom
    and gloom, that I have glanced at. And
    personally I was classified as miserable in 2007 when I realised that ‘it’ was
    going to be bad, and told people I thought that maybe a ‘big’ bank was a risk,
    and that I didn’t rate the monolines chances as ‘it’ spread. What I couldn’t do was to articulate why I
    saw those things coming, not like you are able to do by rolling out little
    looked at issues and stitching them together.
    And by not commenting on politics, just the markets and their human nature
    driven reactions, for me thats the ideal way of presenting it.

    Now, as you point out, the problem has spread to countries from
    businesses (banks/insurers) and is percolating down at various speeds to the
    citizens (maybe subjects) of those countries, who are the final, unaware
    underwriters who are/will take the hit.

    So, to revert to being miserable. It seems to me that though your posts have
    changed marginally in tone over time (I found you in your early notayesman
    existence), but that the comments that you receive are becoming ‘darker’ in
    terms of your respondents thoughts. I
    have to hope that this is just my take, and that we are not speeding up and approaching
    the event horizon to what, in my lifetime, will be the ultimate black hole of European
    social disintegration.

    Certainly the coming high inflation, combined with the
    current policies, is going to be a tough pill to swallow.

    Thanks for the input.

    1. Anonymous says:

      Hi DLinnerage
      Thank you. As to changes over the 2 1/2 plus years I have been blogging I think thta is for others to judge rather than me. But one area which is now clearer is that then I worried that the official responses would be slow and incompetent whereas now we know that they have been!
      There are routes out of this but we have to choose to take them…

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