Big money in social media- quite literally!

If the buzz across the social sphere is to be believed, Facebook and Google executives have entered initial acquisition talks with Twitter, estimating the value of the microblogging site upwards of £10 billion. Combine this with LinkedIn’s recent IPO announcement and we have proof beyond Facebook that there is big money in social media – quite literally.

We all know that a sustainable business model must turn a profit, or at the very least, cover cost. Is it any surprise therefore that, as a company currently haemorrhaging cash, Twitter has entered into such talks? However, how does one value a company with little to no turnover? Is the value in the quality of its user data, on its suggested monetisation ‘potential’, or is it simply that Google doesn’t want Facebook to have it and vice versa?

With such a remarkably different culture to Twitter, could an acquisition of the platform by either of these two internet giants allow it to sustain its high-pace of continued evolution in light of a demanding commercial focus?

The answer is found in the post-investment success of Facebook, achieved in large part by its ability to maintain its core focus as a social platform. Yes, the network displays advertising to monetise the site, but in such a way that does not take away from the user experience, from the social experience and essentially the core function of the site in allowing users to ‘connect and share with the people in your life’.

Whilst there will be an obvious pressure to monetise its offering, this consistency of focus will be the ‘do-or-die’ approach if Twitter is to maintain its prominence in the social sphere.”

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    Weirdly redundant use of ‘literally’ in the headline…

    Yes, it’s all about potential – current multiples are obviously irrelevant.

    More shocking is that Zygna (Farmville) is now said to be valued at a similar level.