The decision by Facebook to put up advertisements on the news feed may act as a further deterrent to the social network?s users. [] As Facebook?s much hyped IPO approaches, the company has stepped on the gas to bolster its monetization; however this could come at the expense of aggravating users.?Facebook leads in the social networking space with competitors such as?Google (NASDAQ:GOOG) and is increasingly taking ad revenues away from struggling sites Yahoo (NASDAQ:YHOO) and AOL (NASDAQ:AOL).
See our complete analysis for Facebook
Ads on News Feed Not a Necessity
Facebook is not exactly facing a cash crunch. The company?s advertising revenues are already expected to double in 2011 from last year, reaching around $3.8 billion. [] Additionally, the company has also consistently expanded its revenue stream further by acting as a host site for various services such as music and games. It seems the company is in a rush to increase its monetization before its anticipated IPO, in order to achieve an even more lucrative valuation.
This prompts the question: Is putting further ads up on the news feed worth the risk?
The ?frictionless sharing? concept has already faced some backlash from users over the clutter it creates, and ads in the news feed could only worsen this problem. As of now, the company seems confident that loyal users will remain hooked to Facebook despite these initial concerns.
We currently value Facebook at around $45 billion.
Understand How a Company?s Products Impact its Stock Price at Trefis
Source: http://c.moreover.com/click/here.pl?r5665190790
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