By Sandy Fitzgerald | Wed Jan 25, 2012 2:07 pm |
Facebook is generating money in a troubled global economy, COO Sheryl Sandberg said, pointing to the site's increasing value as it heads toward its initial public offering.
Those numbers are likely to keep growing as Facebook expands, but the dollars aren't just coming in through people who post status messages. The real money behind Facebook is through its advertising sales, which exceed those of any other website. Sandberg said the European business report, derived from a Deloitte study, shows the social media site has far more value than "just posts and pictures and the fun things with friends." According to a Facebook report about the study, European businesses -- just like those in the U.S. -- are using the site to connect with customers, to advertise and build up brand identity. Thousands of companies make Facebook apps, and technology manufacturers are selling smartphones and tablets to users so they can connect from anywhere, expanding the service's mobile reach. In addition, business associated with the company was responsible for 232,000 jobs in Europe alone this year, said Sandberg, who closed the conference. Facebook plans to start a promotion in Europe, similar to the one in the U.S., to give about $50 in free ad credits to 50,000 European small businesses, according to Sandberg, who noted that while $50 seems a minor amount, it is enough for businesses to reach their target customers on Facebook. The Deloitte study, which details the growing value of Facebook, could give the company further ammunition for its IPO. Facebook will need to convince investors the site is highly profitable through its advertising, so the stock prices will continue to climb. Financial experts already believe Facebook's IPO could bring in $10 billion dollars or more, but investors could be wary if they're not convinced that the site is profitable or secure, unlike other social media sites like the now-little-used MySpace, which was once the giant in the market. Sandberg noted several European companies are already taking advantage of the significant business opportunities Facebook offers, including social game maker Wooga and Swedish music service Spotify, which allows Facebook users to enjoy music together and recently launched in the U.S. Even though the average Facebook user has 130 friends, research shows "the distance between one person and one million is four steps," Sandberg said. In other words, if just four people share content, it can reach one million users. Sandberg said Facebook now drives more traffic than any other site, except Google, and Web visitors referred through Facebook are more engaged than others. This could lead to even more advertising dollars for Facebook, adding value not only to the site but to businesses looking to contact large audiences quickly.
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