Facebook Exploring New Businesses: ‘Gifts,’ Video


We just noticed that Facebook is rolling out a new feature: gifts, which one member can give to another (see screenshot below). Once you receive gifts, they seem to appear on your wall and in a “Gift Box” portion of your profile. It’s unclear if gifts will cost money, but virtual icons have been a big business for social networks like HOT or NOT and Dogster.

Today Facebook also announced a partnership with Comcast that includes the site’s first foray into user video uploads. Get the rundown on NewTeeVee. It’s extremely limited — videos will be submitted as part of contests, and compiled into a half-hour “Facebook Diaries” show — but video is a new and interesting advertising stream, something our contributor Robert Young suggests Facebook desperately needs.



how much money has facebook made off these virtual gifts? in the beginning it was for breast cancer research but now its just buy a gift! where is the money going? anywhere helpful?


they’ll be free soon, once they realize no one will pay to send a “gift”!


I’ve done the reading. Those financials originated during the talks with Yahoo, which were quite obviously before they signed their deal with Microsoft. Do YOUR reading.



Facebook financials were leaked last year during the Yahoo negotiations. You can still find them on Techcrunch. In fact, for 2007 FB expects to sell LESS inventory. Projections showed a plan to cut their remnant and self-service (flyers) from a 89% sell rate in ’06 down to 45% in ’07. Why? By artificially restricting supply, they hope to raise effective CPMs. It’s all there, just look for yourself.

If you think these “gifts” will generate “significant” revenue, you’re dreaming! Let’s say 20% of their users buy a few gifts per year each. Your talking about pocket change in their revenue projections for 2007 ($172M). IMO opinion they might sell some of these to their HS users and college freshmen but most others will probably think giving a friend a virtual icon for $1 is “dorky”. Why not just buy them a $1 longneck?

Lay off the Koolaid John ;) FB is a great company, just floundering when it comes to revenue generation from the great user base they’ve got. $1 puppy icons are not the answer.



If you care to look at the leaked document by Yahoo on the Facebook deal you can see what their unsold inventory is and their average CPM. Just takes a little reading, and some intuition.


I disagree with just about everything Tim said. First off–what remnant inventory is he talking about? I thought that their deal with MSFT took care of ALL their graphical inventory…but the CPM of those impressions isn’t public (to my knowledge). News Feed has another ad product, the sponsored stories, but the inventory of those seems to be–quite logically–much more constrained than that of the graphical ads.

Beyond that, though, I think Tim’s missing something that these ‘kids’ aren’t–they realize how much of a hit this product could be, if done well, with the other “kids” that use the site. As the above article mentions, similar products have been quite successful elsewhere–but never executed as finely as facebook does its products. My personal opinion is that at $1 a pop and carrying virtually no variable costs, these “gifts” are going to create substantial revenue for the company if they gain even minor traction in facebook’s quickly growing user base.


Wow. What’s next, trading peanuts ala Xuqa? I don’t get it. If their traffic is up as much as they say it is since and because of the News Feeds, why the new efforts to increase stickiness and pageviews. Facebook already has more inventory they can monetize. Last year alone before the PV jump from News Feeds, FB had significant unsold inventory. What’s worse, the vast majority of their revenue comes from remnant sales in the $0.17CPM range. Seems the company’s focus is all wrong. They don’t need new features, they need a way to sell what the impressions they already have — and at more than $0.17CPM.

Just because Facebook is for “kids”, doesn’t mean it should be run by them.

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