Microsoft Claws Some Back
October 29th, 2007 by Nick
The biggest thing hitting the news this week has been Microsoft's purchase of a stake in facebook, but what have they got for there money?
Both Yahoo and Google have been courting Mark Zuckerberg and his facebookers for over 2 years with some very big offers, but nothing compared to the value that Microsoft have put on the site. Could the Microsoft move have been a desperate effort to get on the web 2.0 band wagon?
The valuation of $15 billion would appear excessively high, but as Kevin Johnson, president of Microsoft Platforms & Services Division, said Facebook could end up with 200 to 300 million users.
“If you combine the number of users with monetization opportunities and figure out fairly modest average revenue per user per year, you can very quickly get to this level of valuation.”
The stake in the company is likely to have been secondary to any consideration to the deal. Whilst owning any part of the site and it’s database will always have a positive affect and be yet another asset for Microsoft, the exclusivity of providing the ads for facebook far out weighs any stake.
With the Microsoft deal the real asset will always be to get hold of what Yahoo and Google have over them, Traffic Volume.
Much of the hype has been circled around serving ads in a content style targeting. This would mean a very high price has been paid, but with a strategic placement of a Live search box on the facebook profile page, could increase the volume of searches on adcenter.
Forget the stake and the price, this represents a huge step forward for Microsoft’s adcentre platform.
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