Facebook celebrated its fifth birthday this week, and amid all the navel-gazing about what that means for the internet, one big question still hangs over the site: how will it monetize its popularity?
This is an issue that continues to dog the social-networking space, as Om Malik points out that MySpace is struggling
to generate revenues as well. These sites' massive amount of traffic and visitors, and the huge amount of time spent there, have traditionally not automatically equated to big advertising revenue
, and there's nothing to suggest that's going to change soon, particularly given the slowdown
in ad spending. If these sites are depending on advertising for revenues, they've got to come up with something more compelling than simple banner ads, which aren't delivering decent CPM
or clickthroughs. While sites like Facebook and MySpace have plenty of life left in them, at some point, they're going to have to deliver an effective way to generate significant revenues.