MSFT & Facebook

Post Microsoft’s cash infusion to Facebook, placing the valuation of the social network at a staggering $15m+ I am trying very hard, as many others in the Digital Media industry, to rationalize the numbers. Here are my risks and concerns for the group up in Redmond (A group to whom I have utmost respect for):
Social Media as an Online Advertising Vehicle: Online Ad spending growth – Understood. Increase in consumption of Social Media – OK. Exclusive reach of an audience segment – Can live with that. However, where lays the balance between the value of a single user’s exposure to advertising and the return on such investment? Social media sites have yet to prove themselves (I doubt they ever will) as catalysts in online purchase decisions. To me they seem to do a fair job as a viral tool, I am not sure If they can be used as a tool for introduction of brands.
In general, I would hope to see advertising based valuations that have stronger correlation to the track record of the media acquired in fulfilling marketing objectives. While I respect that acquisitions are made based on future projections, I do feel that a mature Online Advertising Industry should use sounds performance figures as soon as possible.
3rd Party Social Applications: Facebook to use the cash to acquire the thousands of applications, and application providers that fuel its website? Possibly, however, wouldn’t it be cheaper for Microsoft to acquire those directly? Are they paying for convenience or for the concern that further ties between Microsoft products and internet application will continue to have a significant price in the European courts.
‘Shrinkage’: The renown male phenomena, introduced in one of ‘Seinfeld’’s chapters, seems to have hit the Online Media space. It is clear that Google, AOL, Yahoo! And Microsoft is creating a consolidated advertising opportunity for their prospective clients. Microsoft is paying for the shrinkage of the long tail, trying – like its peers – to create a one stop shop for advertisers. The model is similar to the one successfully deployed by the Networks for the TV world. Differences:
Content, Audience and Consumption patterns are still fragmented and might prove difficult to package into an upfront model advertising basket.
Microsoft, like others, will need to build an impressive network technology platform that will enable efficient deployment of advertising dollars across this fragmented offering.
Unlike the stable, for many years, TV environment, the online space is constantly changing. In my opinion due to the fact that internet has yet to establish itself as the main platform for premium content. It is still used predominantly as a repository of information and remote human interaction facility. When content arrives, and it will, the rules of the game might change and will diminish valuations of current investments.
The Internet as a Night life scene: Many have mentioned this before. Online properties, especially the ones utilized for remote human interactions, are transient. Like night clubs, they create an exciting atmosphere and establish an attractive fashion for a limited period of time. Facebook, like many other properties online will need to reinvent itself at some point. As it grows, rapidly it seems, this task will become more and more challenging.

A Bee Movie

I like Mr. Jerry Seinfeld! Actually, let me rephrase, I like ‘Seinfeld’. Before ‘Bee Movie’ has even hit the screens, it is easy to guess it will be a commercial success. Being a father of three, recent months drought of animated movies alone, will drive me to the box office on one of the anticipated rainy weekends.
I am surprised though. Mr. Seinfeld has gone out of his way, post the ‘Seinfeld’ era, to demonstrate quintessential approach to ‘celebritism’, shying away from most ‘been there/done that’ projects. A recent New York Times article (http://www.nytimes.com/2007/10/21/movies/21itzk.html?_r=1&oref=slogin), have gauged further interest. I was expecting something new, a different Hollywood, a rejuvenated approach to making movies and promoting them.
Judging from the influx of ads, trailers, co-sponsorships, interviews and coverage, I can confidently determine ‘Bee Movie’ will be yet another A movie. Presumably above than average humor, production quality and story depth and definitely above the average gross revenues. Albeit, not a revolution that is even close to the way ‘Seinfeld’ changed the TV Sitcom scene.