Should I be worried that I know 90% of what Loren Feldman is talking about here?

Speaking of Facebook, via BrightSpark, Jim Meskauskas on Facebook in 2008

Toilet paper, after all, is also rather popular. Certainly everyone I know uses it. But I have yet to see ads on it.

He’s right, y’know. There’s a whole new rash of irrational exuberance about the revolutionary advertising prospects for Facebook and friends. It all sounds similar to the initial buzz around online advertising (long before AdWords) and the silly money charged for CPM banners. Prices justified because of the millions of eyeballs a big site could deliver. Then it became apparent that direct mail response rates were superb compared to the majority of banner click-through rates.

Valuations of social networking sites are based on subscriber numbers and the potential to generate revenue per subscriber. Highly-targetted advertising and affiliate sales seem to be the only plausible means to this end. Subscription numbers are this year’s eyeballs.

There are differences of course, such as the attempt to badge Facebook and others as platforms, rather than mere websites. That argument only goes so far, since Facebook’s current perceived advantage rests on the fact that it is a walled garden for user data (as evidenced by the Scoble debacle, which had nothing to do with privacy laws). The Beacon mis-step was anything but. If your competitive advantage vanishes when the walls come down, you’d better cash in whilst the walls are still up.

Ask mobile operators about that (see Vodafone Live!, Orange and how difficult operators and handset manufacturers made it for the average user to find their way out onto the wilds of the mobile Internet). The mobile operators still have control of the pipes, or enough of the pipes to charge for access. Facebook doesn’t have that luxury.

There seems to be a tendency to forget that, whether one approves or not, what media does is deliver audiences to advertisers. This is why Google creates lots of applications. It builds an audience. If the application can also gather consumer information all the better. A premium price can be charged to the advertiser based on the probability that the user may be somewhat disposed to view the ad. Simple as that.

I’ll be moving these ’serious’ posts to their own location soon