Brick-and-mortar biggie Target will start selling Facebook Credits gift cards in-stores nationwide September 5, the retail chain announced today.
Facebook Credits are a “virtual” currency for all those Facebook users addicted to games like Zynga’s FarmVille. Shoppers will be able to buy $15, $25 and $50 cards.
Here’s why you care: The news shows just how hard Facebook is working to avoid the situation Google finds itself in now.
Why would Facebook want to AVOID Google’s Fate? Won’t Google turn in $25 billion+ revenues this year?
Yes, but that revenue isn’t growing like it used to.
Google makes more than 95% of its money off of one revenue stream: search. Industry-wide, search growth is slowing. Slowing revenue growth has left Google’s stock flat. This has Google desperately running around trying new businesses – Android, Google Me, Google Games, YouTube, etc.
But Google is having a hard time making these businesses relevant. For starters, a new business needs to be a HUGE new business at Google to show up as meaningful growth against a $25 billion base.
Another reason: Because of its flat stock price, Google is having an increasingly hard time attracting and retaining talented people. Entrepreneurial types believe they can make more money building businesses elsewhere.
The ex-Googlers running Facebook, starting with COO Sheryl Sandberg, are determined to avoid turning Facebook into another one-trick pony.
Facebook’s 2010 brand advertising revenues will come in as high $1 billion or $1.5 billion. But the whole virtual goods business – the one Facebook is bringing to Target on September 5 – could bring in another few hundred million dollars. Former Facebook president Sean Parker says the business could end up being a third of Facebook’s revenues this year.
Google would love to have baked-in that kind of revenue diversification before it IPO’d back in 2004 instead of being forced to scramble around for a new business seven years later.
Here are all the revenue streams Facebook is currently exploring for now and later:
Search ads – All these “Like” button are building a hierarchy of Web pages, similar to Google’s Pagerank.
Facebook Credits in games – Thanks to hugely popular games like Zynga’s Farmville, this could already be a third of Facebook’s revenues in 2010.
Pay with Facebook on third-party ecommerce sites – If your credit card is already in the system, why not just click “Pay With Facebook” instead of going through the hassle of a check-out process?
Local coupons – Facebook just launched a “check-in” feature called Places. Groupon is showing that local businesses will buy coupons if they will draw a crowd.
Brand advertising on Facebook.com – Brands like Facebook ads because they drive traffic to Facebook pages. If user “Likes” a Facebook page, that page owner can them spam them almost at will.
Brand advertising off Facebook.com – Almost 100 million Facebook users log-in to third-party sites using their Facebook IDs through the program that used to be called Facebook Connect. Facebook knows more about these visitors to third-party sites then the third-parties themselves. This puts Facebook in a position to either sell ads for those third-party sites, or to sell anonymized data to those third-parties sites, so they can themselves sell better-targeted ads.
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