Let me qualify what I am going to say by clarifying it is opinion based on my sentiments on Facebook and not on research.
Tuesday, May 24, 2011
Why aren't FACEBOOK adspace prices higher??
Right now any ads run on Facebook are both underpriced with comparison to other advertising inventory online, as well as relatively ineffective. Why?
To me it seems that Facebook faces a conundrum. To keep the main area of their pages "pure" with the social utility of the posting and messaging, they must make Ad space minimal. SO as long as Facebook is as popular as it is, it seems that Ad space will continue to be minimal. BUT if Facebook becomes less popular, either due to novel competition or burnout, then they have space on their pages that could sell like Gold to the LONG TAIL of the remaining users of Facebook.
So either Facebook sells out some of its most loyal users and puts ADs more centrally located in the pages, and makes more money that way, or membership remains extremely high due to new functions and relatively low ads.