There is a not so positive piece in today's Mediapost Media Daily News stemming from coverage of a panel held yesterday that included interactive media buyers from leading agencies. Essentially, the panelists collectively said that Facebook missed out on a big opportunity when they passed on an opportunity to be acquired by Yahoo last year for a cool $1 billion. The panelists noted that the buzz around Internet M&A has switched from the social networking sites like MySpace and Facebook to the large advertising networks and Internet advertising technology companies like 24/7 Real Media and Doubleclick, two companies recently acquired by agency holding company WPP and Google, respectively. I have to strongly disagree with that notion, considering there hasn't been a week that's gone by where something wasn't happening with a social networking site. Even today, news is out that Club Penguin, a social networking site aimed at the tween crowd, competing with the like of Whyville and Webkinz could be acquired by MySpace parent company News Corp or even Sony, who purchased video sharing site Grouper last year. To say that Facebook's time has come and gone is a bit naive and nearsighted in my opinion. According to our own research, Facebook's growth rate both domestically and internationally (through the few select international markets we cover) is growing at a considerably faster rate than that of MySpace. One could argue that MySpace hit a major saturation point and Facebook is just picking up the scraps, but again, I don't believe that is the case. In my mind, Facebook's cachet--it's unique selling point goes back to its roots as the main driver of a paradigm shift in the daily communication habits of teens and college students. Yes, they opened up their membership base last year to include a broader audience, but their original core market doesn't seem to care or notice that fact and they remain, by a wide margin, the dominant social networking site among teens and college student nationwide. Time and again, ever since the Yahoo acquisition rumors popped up, Facebook execs led by their CEO have said they are interested in building a company for the long haul, not looking for the quick exist strategy. If you go back to 1996 and '97 Yahoo co-founders Jerry Yang and David Filo were saying a lot of the same stuff and for all of the negative buzz that has circled around Yahoo over the past year and half, they still managed to build a company that generates nearly a billion dollars in net profits a year and commands a market cap $40 billion, I'd say that is not too shabby for a company that was non-existent a little more than ten years ago. Facebook's traffic and membership is growing by leaps and bounds and from what I can see they are getting very creative in coming with innovative applications that will ultimately add value to their platform and ideally create more effective advertising opportunities for their clients. Our friends over at emarketer estimate that social network ad spending will reach $865 million this year and nearly $2.2 billion by 2010, Facebook has just as good a chance to capture a giant share of that spend assuming they continue to execute against their strategic plan. So perhaps going at it alone isn't such a bad idea after all, as much as their direction and focus may be considered not in vogue by some.
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