Tuesday, February 15, 2011

Perspective on Valuation of Facebook

In April of 2009 I posted commentary on what the valuation of Facebook might mean in terms of the daily audience it accumulates. Let’s look again. 

Here is a recent table from Nielsen Online showing the magnitude of the Facebook audience within the United States as of December, 2010.

There were 135.602 million Facebook visitors in the United States alone. This amounts to 68.3 percent reach of active Internet users in the US. 
Looking back to April of 2009, Nielsen reported 34.8 percent reach for Facebook with about 54 million visitors.  Also at that time visitors averaged about two and a-half hours on the site or about 5 minutes a day.
As shown in the chart, people are now averaging about seven hours per month or about 14 minutes per day. Clearly, some are on the site longer each day, but the average has reached the quarter-hour level.

Now, turning to attention as the most valuable of all commodities, it is within this quarter-hour average daily window that the valuation of the company must make sense.
The latest reports place the valuation of Facebook at about $52 billion.  Looking at this from an audience accumulation perspective, in the United States alone, this valuation equates to a little over $380 per each member of the currently active Facebook audience. In April of 2009, this same calculation resulted in $50 per audience member in the US. 

On a world-wide basis, the calculation is a little over $190 per visitor, and the average daily time on the site drops substantially. 
Clearly, the audience size and daily time on the site have been increasing dramatically. Moreover, we are seeing Facebook engage with the civic space of entire nations in dynamic ways.  But, it is within this magic quarter-hour daily “attention structure” that the advertising model will have to pay out for Facebook.  This continues to be an intriguing story.
Copyright © 2011 by John Eighmey. All Rights Reserved.

No comments:

Post a Comment