Would you pay to use Facebook? – 11485

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.


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?

Sign up for our free email newsletter here, for your chance to win an Amazon Kindle Touch.

The Financialist

Leave a Reply

Your email address will not be published. Required fields are marked *