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Monday, 30 August 2010

How much can a "free" service be worth?

Well, based on secondary market transactions, Facebook is now worth as much as $33.7 billion. Common stock in Facebook trades as high as $76 a share as investors try to get a piece of the company before it files for an IPO.

Media industry sources say Facebook may soon make as much as $1 billion in annual revenues, mostly from its "engagement ads" program. Facebook dropped traditional internet advertising when its partnership with Microsoft expired and has chosen to focus on ads based around users' stated interests and preferences.

Facebook is certainly making money and the Facebook "fan page" is the hottest ticket in brand marketing. It won't always be, but being out ahead certainly helps the share price.

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