Microsoft and Facebook Partner for Ads

Oct 25, 2007 • 9:20 am | comments (1) by twitter | Filed Under Social Search Engines & Optimization

Microsoft and Facebook are new best friends. According to a Wall Street Journal article, Microsoft has invested a considerable sum of money -- nearly $250 million -- to provide advertising on the coveted social platform.

Microsoft Corp. agreed to invest $240 million for a minority stake in Facebook Inc. that values the social-networking site at $15 billion. As part of the deal, the two companies expanded their advertising agreement.

Forum discussion is mixed. Microsoft has valuated the company at roughly $10-15 billion. Facebook is only bringing in $150 million a year. How does it add up?

Others find that Microsoft screwed up.

Looks to me like M$ have got a great deal and FB have gone [nuts].

They've denied themselves any future bids from Google Yahoo! etc., and for what?

A little bit of development cash in exchange for a long term advertising deal - which will get M$'s money back in twenty minutes.

However, even others are happy for Microsoft since this is good exposure for them.

As for myself, I can't say I'm happy with the Microsoft-Digg advertising partnership (I am sick of seeing advertisements) so I honestly am a bit skeptical about this relationship.

Additional coverage (lots!) is at Techmeme.

Forum discussion continues at WebmasterWorld.

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Edward Vielmetti

10/25/2007 01:34 pm

I'm personally somewhat skeptical of the immediate value of this deal, though in the long term it's probably great for everyone. Advertising on social networks is plagued by low click through rates and low conversion rates. Most people don't find banner ads, even behaviorally targeted ones, relevant. This contributes to absurdly low CPMs (Scrabulous is advertising a $0.50 CPM on their Scrabble games.)

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