Niche marketing at its finest:

Yahoo Keeps Its Eyes on Facebook

Post inspired by Businessweek Online article linked above

Getting a handle on niche markets

is all about strategy and outbidding

your competitor.

Yahoo has offered Facebook 1.4 billion dollars to acquire its social network. Even though Facebook has turned down the Yahoo offer, talks can easily start up again. So why is Yahoo willing to give so much? Well, it came to Facebook when its Yahoo shares lost 20% of their value on news that its new targeted advertising technology would be delayed. Also, its own attempt to start a social network was a flop and it lost out on the bidding war for the acquisition of MySpace to its competitors, Google and News Corp. So, Facebook seemed to be the next logical choice since it has become a top Web destination. According to comScore Media Metrix, It had 14.8 million unique visitors in August 2006 alone. With 56.6% of these users being younger than 35 years of age. This creates a perfect targeting niche that Yahoo desperately needs because advertisers would pay huge bucks for access.

There's the added benefit of Facebook having a large share of the college market. Its market's membership is bound to keep on growing due to the wonders of viral marketing that swarm college campuses. Basically, its directed word of mouth that spreads the word around about certain sites and products. Word of mouth being spread around campuses is what advertisers like to hear if they are going to be plugging their products on the site.

It seems that advertisers are now looking for web portals to provide them with niche markets that have better odds of bringing in revenue for the advertisers and, in turn, allow portals such as Yahoo and Google to rack in advertising clientele. So what does this mean for consumers of the net? Well, in my opinion, joining social networks turns their members into commodities. This gives a lot of power to the consumer. No wonder why Facebook was so quick to hush the uproar of its users. When Facebook created a news feed of “friend activity” without consulting focus groups or announcing the change to its users; a small turnover of users occurred. This turnover could have been bigger if Facebook had not responded as quickly as it had; a great move by its CEO Mark Zuckerberg.

So what does this mean for the users of Facebook if Yahoo does acquire Facebook? Are those pesky pop-up ads going to be on every page a user visits? Hopefully, that won't be the case.

Are great promotions going to be given to attract the typical college minded user? If so, it would be a win-win on the side of users and the advertisers. These Advertainments (as marketers call them) would benefit college users by showing them advertisements in the form of entertainment while the advertisers benefit from getting their “money's worth” in a successful campaign.

One things stands clear, if Facebook does decide to start considering offers for its site the bidding war will be nothing short of overwhelming.

The Ruminator