Real Value of Social Networks
Techcrunch has an interesting article analyzing the real value of a social network by the ad revenue potential of each user in their local countries.
TC has done a detailed analysis here http://spreadsheets.google.com/pub?key=pSnKg7M-DPfdEvcCrNoiETA
I agree in principle that the value of a social network comes down to monetizing its users and ad seems the plausible way today.
Hanging around Facebook and Facebook economy of developers a lot and my recent foray into Bebo, I see two main points missing:
1. Social Ads or monetizing users based on their social endorsement is being experimented by Facebook and is in infancy. That promise is the basis of its valuation and not standard ads alone.
2. Even if we were to look at regular ads only, I as a user on facebook am more valuable to facebook than a new user who has a profile with 2 apps and 1 wall post. The page views a user produces by their activity level is important. So any measurement to find the percentage of engaged users for each platform will provide more realistic numbers on their revenue potential and valuation.
So based on this I would conclude Bebo’s valuation should be much higher than the $850Mil AOL paid for it.










