Faves for this Web page

• mike - Oct 25 2007 | microsoft, google, advertising, startups, acquisition

  For $240M, Microsoft gets:

  - 1.6% ownership stake
  - 50% of international (non-US) ad revenues (for how long?)

  This is on top of MS's previous deal to receive banner ad revenue in the US through 2011.

  Facebook has 50 Million active members each month. I think it reasonable to expect that that number will go to 75M in the US - but there is a limited amount of growth in the next 5 years (generational changes have to occur to break the 100M barrier).

  I don't know what Facebook's international penetration is - one would think the potential would be there for 100M outside the US as well.

  So, with 200M active users, each visiting the site multiple times per week, it's not outrageous to assume a 4 B visits per month business, generating 20B monthly page views.

  At $2 CPM that would generate revenues of $40M per month (480M per year) [I would expect FB gets well BELOW $2 CPM; FB users are busy using FaceBook - not looking at and clicking ads]

  Rather than purchasing equity - MS may just be purchasing inventory in this deal (like their previous one with FB). If FB can penetrate international markets similarly to how they've operated in the US, MS could get a $100M annual revenue stream from this deal.

  Quoted: The investment ends two months of jockeying among Microsoft, Google and Yahoo for the right to invest in and forge close ties with the fast-growing social networking Web site.

  • mohit - Oct 25 2007
    

    if this deal has some sort sort of exclusivity attached (where microsoft gets all the inventory) -- this makes complete sense.

  • mike - Oct 25 2007
    

    They get 100% of banner ad inventory (50% revenue split) outside the US.

  • mohit - Oct 25 2007
    

    missed this on the first read. thanks!

Votes for this web page

• Mohit
• Rich