3 Key Trends to Watch for Facebook
Facebook primarily competes with Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT) and AOL (NYSE:AOL) in the display and search advertising markets. Below we highlight three key trends that will go a long way towards driving Facebook’s value in the years to come. We currently peg Facebook’s intrinsic value at $45 billion.
Better Demographic Targeting
We estimate that text and display ads are the most valuable business for Facebook, making up roughly 60% of our estimated value for the company. Facebook’s revenue per page view [RPM] declined from around $0.58 per 1,000 page views in 2006 to $0.38 per 1,000 page views in 2009. However, RPM rebounded back towards $0.45 in 2010, and we expect further growth towards $0.54 per 1,000 page views by the end of our forecast period.
Chart created by using Trefis app
Facebook allows for targeted advertising based on user demographics. Better demographic targeting will increase click throughComplete Story »