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Facebook is the largest social network in the world with over 845 million users. Thanks to its massive scale and high user engagement, it makes billions of dollars in advertising revenues. Facebook has been trying to roll out optimized advertising units, which maximize the monetization potential of its large user base while not being too intrusive.
It has rolled out several new ad units and has also updated its profile pages, photo viewer and rolled out the new Timeline to provide value to advertisers through better ad type units. Facebook leads the social networking space and competes with players such as Google, and it is increasingly taking ad revenues away from aging giants like Yahoo and AOL.
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Facebook betting on Timeline to increase user engagement and monetization
This week Facebook rolled out its revamped page design – Timeline – to all brand pages on the network. [1] Timeline is a major upgrade over the previous News Feed view, which completely changes the way brand pages or user profiles appear on its network. While it is still optional for users, Facebook has forced every brand to use the Timeline view. Eventually, it will migrate all user profiles to the Timeline view too.
With Timeline, Facebook is trying to increase user engagement on the website by surfacing relevant status updates, images and other shared items more effectively in a reverse chronological order. Timeline also offers brands more customization options, enabling them to add/remove events and other content on their pages.
It could also increase the click through rates by displaying more relevant, socially targeted ads on brand pages and user profiles, thereby increasing its advertising revenue.
Display and text advertising currently accounts for around 75% of Facebook's total value and accounted for almost 85% of its overall revenue in 2011.
We currently have a $82 billion Trefis valuation for Facebook. This is below the rumored valuation for the IPO that is expected to reach $100 billion in the coming months.
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Notes:
- Facebook timeline rolls out to all brand pages, Arstechnica [↩]
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