Facebook uses the same revenue model as Google: Advertising to viewers of their sponsored pages. And both companies have large numbers of users looking at their web pages. So advertisers and investors should take comfort that there is an enormous earnings future for Facebook. But the Facebook IPO is faltering. One has to ask, Why?
Here’s what I see as the key difference between Facebook and Google:
When I go to Google for searching I welcome ads. Ads help me do my search.
But when I use Facebook, those same ads just get in my way. There is no connection between the reason I’m on Facebook and the ads that appear there.
Your pricing and revenue model must reflect the reason your customers use your product. For example, you won’t find over-priced items in Wal-Mart®, the discount retailer, and you would be disappointed to find anything but over-priced products and services with the Trump® brand name on them.
Does your pricing and revenue model reflect your customers’ expectations?
What is your Big Idea? Is it protected? Are you using it as a platform for creating wealth? Would a prospective buyer of your company view your Big Idea as defensible property, or a non-contributor to your company’s value? Consider a no-obligation consultation with Argent Place Advisors to discuss how you might exploit your Big Idea to create more wealth.