Can Facebook 'Monetize Eyeballs?'

Fast forward to 2012 as Facebook  goes public, proclaiming it has captured a billion eyeballs and therefore is worth hundreds of billions of dollars. The initial reaction to Facebook now that the veil of mystery has been lifted has been disappointment. That’s not just based on the messy initial public offering, but on the sudden realization that monetizing a brand isn’t as easy as it might look from afar.

While there are many reasons for Facebook’s unsuccessful IPO, the primary one has to do with how a company can “monetize eyeballs.” As the ’90s entrepreneurs discovered, just having the attention of a large group of participants doesn’t mean they are willing to give you money. In the case of Facebook and other social-networking sites, the expectation was that consumers would live in that world and trust advertisers who paid real cash for access. In reality, Facebook’s problem is simple: Of those billions of eyeballs, how many hang out in the Facebook world? Many are “Facebook voyeurs”—people who check the network without any real engagement. I wouldn’t be surprised if as many as half of Facebook’s users fit into that category.

Facebook faces three problems as it works to reposition the network as more than a place where people post family pictures. First, it has to become viewed as a real company with significant intellectual property. Second, it has to become a trusted partner to consumers—who are its product. Third, Facebook needs to create a platform on which the consumer wants to live and work.  This will be a difficult transition for Facebook, just as it was for dot-com companies less than two decades ago.