The answer is simple. Only if they can turn their organically grown database into a revenue stream channel the $100 billion valuation makes sense and one can make money out of it. If you think this is a good answer, think again?
This answer fails to understand the influential power social connections can have long-term. By thinking you can't make money since users aren't clicking on ads you are missing the whole point. In the online world we are all used to measuring everything from click through rates to sales in real time, however with social sites like Facebook one must have a holistic approach in order to reap the benefits which lie underneath the surface. It's a bit like saying we shouldn't invest in customer service because it doesn't produce returns; while you may not be able to track the return on investment on your customer service initiatives like you can with your marketing campaigns, that's not to say that investing in customer service won't yield positive returns.
A new report by internet marketing research company Comscore suggests that social media marketing can show a positive return on investment by directly influencing sales, but it has to be measured in a different way to conventional online marketing since it's not ads that are driving sales, building brands and creating customer loyalty. It's the very act of being social and engaging with your customers. That means understanding the link between Facebook's various ad units with what Comscore calls free earned media, which is essentially the posts and other actions by brand and consumers on the social network.
The Comscore report cited examples of how advertising on Facebook could be traced to sales increases. For example, by tracking consumers who were Starbucks fans on Facebook against a control group of shoppers who weren't exposed to those messages, Comscore found that over a four-week period, 2.12% of the brand's fans and their friends made a purchase at the coffee shop. That's 0.58 percentage points higher than the 1.54% for the control group. That suggests that fans and their friends made 37.7% more purchases than those not exposed to the brand's earned media.
So all in all, can we buy Facebook shares at the current price and still make money. While the answer seems positive, you may want to wait as the current scepticism around Facebook's potential to deliver a return on investment may result in share prices dropping short-term, only to start seeing an upward movement medium to long term but we will most probably have to wait several years to witness this change. I guess the question is, if social media advertising is still in its infancy, where is the social media stock market? You can't expect for investors to understand now what most marketers still don't.
Social media will create a revolution in how we behave ourselves and eventually will start the next bull market, but not for at least three to five years. Social media gives the ability for everybody to be in instant communication with everyone else, and that's very powerful. We must not forget that Facebook is the pioneer of the social media generation, and remains as the most powerful social media network in the planet.
Follow Vashi Dominguez on Twitter: www.twitter.com/VashiDominguez
Iain Duncan Smith: poverty is not solved by just more money - Daily Telegraph
Figures to be published today are expected to show that the Government failed to meet its statutory target to halve the problem by 2010 – despite the huge amount of taxpayers’ money spent on tackling it.
Mr Duncan Smith will unveil a new analysis which will show that hundreds of thousands of children will be lifted out of poverty if at least one of their parents works 35 hours a week earning the minimum wage.
The introduction of the universal credit, under the Government’s welfare reforms, will mean that people returning to work from benefits will continue to receive some state support.
Any child living in a household which earns less than 60 per cent of the typical income is defined as living in poverty. This is likely to be changed so that children living in workless households or those with drug-dependent parents are highlighted.
Mr Duncan Smith will also set out plans to change the definition of child poverty so that a more sophisticated analysis is used.
Speaking ahead of his speech at the Abbey Community Centre in London, Mr Duncan Smith told BBC Radio 4's Today programme: "What I'm talking about is getting away from a system that got so trapped in the idea of meeting a relative income target so narrowly that more and more money was spent on welfare but keeping people out of the work process.
"What we need to do is make sure we tackle poverty but tackle it in the process of trying to move them on (to work).
"If you just measure relative income levels you know nothing about what's happening to the family."
In his speech, he will accuse Labour of “pouring vast amounts of money” into increased benefit payments to tackle poverty. He is expected to say that the strategy has failed and parents need to be helped back to work rather than simply subsidised by the state.
He will say: “Getting a family into work, supporting strong relationships, getting parents off drugs and out of debt — all this can do more for a child’s wellbeing than any amount of money in out-of-work benefits.
“With the right support, a child growing up in a dysfunctional household, who was destined for a lifetime on benefits could be put on an entirely different track — one which sees them move into fulfilling and sustainable work. In doing so, they will pull themselves out of poverty.”
He will add: “Our latest analysis suggests that universal credit will ensure the vast majority of children will be lifted out of poverty if at least one parent works 35 hours a week at the minimum wage — or 24 hours if they are a lone parent.
“For those who are able to work, work has to be seen as the best route out of poverty. For work is not just about more money — it is transformative. It’s about taking responsibility for yourself and your family.”
Mr Duncan Smith will indicate that Labour wasted large amounts of public funds as it failed to halve child poverty. “The last Government spoke about the need to tackle poverty, and poured vast amounts of money into the pursuit of this ambition — £150 billion was spent on tax credits alone between 2004 and 2010.
“Overall, the welfare bill increased by some 40 per cent in real terms, even in a decade of rising growth and rising employment,” he will say.
Ministers are drawing up plans to introduce a series of measures to gauge whether families are living in poverty, such as whether parents have drug or alcohol problems or whether they are working.
In today’s speech, the Work and Pensions Secretary is expected to defend the need to change the definition of child poverty. “If a family has less than 60 per cent of the median income it is said to be poor, if it has 60 per cent or more it is not,” he will say.
“By this narrow measure, if you have a family who sits one pound below the poverty line you can do a magical thing. Give them one pound more, say through increased benefit payments, and you can apparently change everything — you are said to have pulled them out of poverty. But increased income from welfare transfers is temporary if nothing changes.”
Mr Duncan Smith’s call for disadvantaged families to return to work may come at an inopportune time with unemployment rising as the double-dip recession has led to a lack of jobs.
William Hague, the Foreign Secretary, caused controversy recently by telling Britons they had to work harder to help the UK escape from recession.
Money market fund assets fall to $2.554 trillion - Yahoo Finance
NEW YORK (AP) -- Total U.S. money market mutual fund assets fell by $10.68 billion to $2.554 trillion for the week that ended Wednesday, the Investment Company Institute said Thursday.
Assets of the nation's retail money market mutual funds fell by $550 million to $890.20 billion, the Washington-based mutual fund trade group said. Assets of taxable money market funds in the retail category fell by $50 million to $703.57 billion. Tax-exempt retail fund assets fell by $500 million to $186.63 billion.
Meanwhile, assets of institutional money market funds fell $10.13 billion to $1.664 trillion. Among institutional funds, taxable money market fund assets fell $8.47 billion to $1.579 trillion; assets of tax-exempt funds fell $1.66 billion to $84.77 billion.
The seven-day average yield on money market mutual funds was 0.03 percent in the week that ended Tuesday, unchanged from the previous week, said Money Fund Report, a service of iMoneyNet Inc. in Westborough, Mass.
The 30-day average yield was also unchanged from last week at 0.03 percent. The seven-day compounded yield was flat at 0.03 percent. The 30-day compounded yield was unchanged at 0.03 percent, Money Fund Report said.
The average maturity of portfolios held by money market mutual funds was the same as the previous week at 45 days.
The online service Bankrate.com said its survey of 100 leading commercial banks, savings and loan associations and savings banks in the nation's 10 largest markets showed the annual percentage yield available on money market accounts was unchanged from last week at 0.13 percent.
The North Palm Beach, Fla.-based unit of Bankrate Inc. said the annual percentage yield available on interest-bearing checking accounts was unchanged from the week before at 0.06 percent.
Bankrate.com said the annual percentage yield on six-month certificates of deposit was also unchanged from the previous week at 0.21 percent. The yield on one-year CDs was unchanged at 0.32 percent and flat at 0.51 percent on two-and-a-half-year CDs. It fell to 1.11 percent from 1.12 percent on five-year CDs.
Printing money: How to create a currency - BBC News
European officials may not like it, but the prospect of Greece leaving the euro is a serious possibility.
The picture will become clearer after a Greek election on 17 June.
If the winners are hostile to the austerity measures demanded by the European Union and IMF, then Greece might have to look for a new currency.
It would not be a simple case of resurrecting Greece's old currency the drachma.
Changing currency is a complicated process that would take at least six months and probably much longer.
So the new Greek government might want to call Warren Coats.
Over the last 20 years at the International Monetary Fund, he has advised numerous countries on how to create currencies.
His clients have included nations that emerged from the Soviet Union including Kyrgyzstan and Kazakhstan.
Mr Coats has also helped Iraq and Afghanistan and, most recently, Southern Sudan to launch new money.
He says there are three phases to the process.
Currency design and production
"Deciding what and who appears on a nation's currency might sound trivial, but it is highly political," said Mr Coats.
Bosnia-Hercegovina is a good example of how difficult the situation can be.
In the late 1990s after a bloody war for independence the nation had to form a new currency.
But the three groups that make up the population, Bosniaks, Croats and Serbs could not agree on who to put on the notes - even when the choice was limited to literary and artistic figures.
"Usually two would agree one would disagree," said Mr Coats.
"This went on for many months. And in the end there was never an agreement," he said.
The head of the central bank, Peter Nicholl, who was a New Zealander appointed by the IMF, decided what went on the currency.
In Greece's case, the situation is much less fraught. It can draw on the images and figureheads used on its previous currency the drachma.
It may though have to decide on how many denominations of note there will be and what they will be worth.
There is useful rule of thumb to help with that.
Experts say the largest coin should be worth around 2% of the average day's wage and the smallest note should be worth 5% of the average day's wage.
Once those details are sorted out the notes will have to be printed, which is usually done by a specialist printing firm.
It is estimated that for a country the size of Greece that would cost $50-$60m.
There are not many firms that can handle a contract of that size and if they are busy then Greece might have to wait for its new currency.
Analysts say there is no chance of a new currency before the end of this year.
"If this was a serious consideration for 2012 the presses would have to be running already. And there are no credible rumours that that is happening," said Paul Jones an analyst at Panmure Capital.
Preparing rules for exchange
Getting the new currency printed is just the start of the process.
Greek officials would then have to work out how to get that new currency into the system.
The problem for Greece is that the population is unlikely to want to exchange their euros for the new currency.
Rules may have to be put in place to prevent large amounts of euros leaving the country.
There would have to be an information campaign to make sure the population understood how the process would work.
The question of timing also has to be addressed at this stage, ideally banks and other businesses would need enough time to adapt their systems.
The notes would have to be distributed to banks and a launch date set.
Legal issues
Notes and coins are just pieces of paper and bits of metal until they have the status of legal tender.
That requires laws which define and control the use of a currency.
When swapping a currency these have to be adapted and laws will have to be approved in Parliament.
Business will have to look closely at the new legislation to see if contracts priced in the old currency are still valid or need renegotiation.
So should Greece embark on such a lengthy and expensive process?
Mr Coats has this final thought: "The majority of Greeks want to keep the euro because they don't trust their government and central bank to do better with a new currency of their own than they did with the old one."
No finance limit forces Obama into fame game - Sydney Morning Herald
Illustration: Simon Letch
This morning, Australian time, the US President, Barack Obama, is due to attend a fund-raising dinner party at the New York home of movie stars Sarah Jessica Parker and Matthew Broderick. Co-hosted by the editor-in-chief of Vogue, Anna Wintour, the price of a ticket was a reported $80,000 a head. Not a good look for the President in the week the US Federal Reserve reported that average American wealth had plummeted to $77,300 in 2010 - down from $126,400 in 2007.
As the US economy is underperforming, unemployment is officially 8.2 per cent and confidence is, at best, wavering, this would not seem to be the time to be hanging out with high-wattage wealthy celebrities. But the President needs the money.
Obama and the now certain-to-be-anointed Republican candidate, Mitt Romney, have opted to not accept public financing for the 2012 presidential election campaign. Previously, candidates would raise money to boost their electoral fortunes before the party conventions, but after that would accept the benefits - and constraints - of public funding.
Now, after a Supreme Court decision that effectively deregulated campaign financing (undoing all those decades of hard work to reform what had arguably been a pretty corrupt system), the bar has been raised significantly.
More money is going to be needed. And there are now virtually no limits on how it is raised or spent.
This presidential election is, according to Obama's senior campaign strategist, David Axelrod, going ''to test the limits of what money can do in politics, because there's gonna be so much of it concentrated in so few states'', as he told New York magazine's John Heilemann earlier this month.
And Obama is now falling behind in the fund-raising stakes. Although at the end of March, when he had raised about US$197 million, he was way ahead of the then-frontrunner Republican contender Romney, who had just $87.5 million, the other Republicans have since coalesced behind Romney - and so have their donors.
Just this week, billionaire Nevada casino owner Sheldon Adelson, who had been backing Newt Gingrich, kicked in $10 million to Romney's Restore Our Future super-PAC (political action committee) and Forbes magazine reports he may well follow that with the $100 million he had promised Gingrich.
Last month, Romney raised $76.8 million to Obama's $60 million, and he is pulling ahead with the very wealthy.
Wall Street has spurned Obama, so far giving Romney $37.1 million and Obama only $4.8 million. Ominously, these sums include donations from 19 people who gave to Obama in 2008 but not this time. Forbes says 32 billionaires, or 8 per cent of their 400 rich list, have donated to Romney and more will follow.
So while Obama continues to pursue the grassroots online fund-raising that was so successful in 2008, for the really big bucks he is being forced to take his begging bowl to three different and potentially risky sources of funds: Hollywood, Silicon Valley and rich gays. No one in the know doubts that the President's decision to support gay marriage was made with an eye to the pink dollar. A few days after the decision, a Hollywood fund-raiser hosted by George Clooney and including high profile gay supporters, raised $15 million.
This strategy is risky because it requires Obama to be hanging out with the mega-rich at a time when his political message is directed to economically distressed Americans, who are striving to return to being middle class. It could easily backfire on him.
The now pretty much united Republicans are trying to portray Obama as more focused on fund-raising than on governing. Given he has done 160 events so far (compared with George Bush's 74 at this time in the 2004 race), including six in just six hours in Maryland last Tuesday, this will not be a hard case to make.
A few weeks ago it was unimaginable that America's first black president may be in danger of not winning a second term but that prospect is now causing apprehension and even panic among Democrats.
The failed recall of the Republican governor Scott Walker in the highly unionised and overwhelmingly Democratic state of Wisconsin is being seen as a huge wake-up call that the party cannot assume that it will win in the presidential election in November.
Consolidated polling is showing just a two-point difference between Obama and Romney. Even among the three key demographics Obama felt confident of holding - women, young people and Latinos - the numbers are starting to close.
If Romney chooses Latino Florida senator Marco Rubio as his running mate, as a straw poll among party conservatives advocated this week, they could be a formidable team able to make significant inroads into the much-needed Latino vote in states such as Florida and Arizona.
Obama shows no signs of improving his ticket would he ditch the Vice-President, Joe Biden, although refreshing his team would seem to be a no-brainer in a tight electoral race. If this is not the time to place the extremely popular Hillary Clinton on the ticket, when is?
Obama's team foolishly set the bar high by leaking their expectation that their guy would be the first in presidential election history to raise $US1 billion and that Priorities USA Action, his super-PAC, would rake in another $100 million. Instead, Obama is struggling to reach the revised target of $750 million and his PAC, according to New York magazine, has just an embarrassing $10 million.
So we will be seeing a lot more of Obama with movie stars and the super-rich in coming months. The only question is whether the money raised will be at the expense of his political credibility - and his electoral prospects.
Twitter: @SummersAnne
Follow the National Times on Twitter: @NationalTimesAU
Money managers reap crop insurance harvest - Financial Times
June 14, 2012 9:30 pm
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