The network is coming, folks, whether Facebook
Last week, I commented on how launching a third-party ad network, or a system where Facebook would serve targeted ads on websites other than its own, could be a positive near-term catalyst for Facebook investors. Why? The move would open up sizable near-term revenue opportunity, boosting the top-line growth prospects that have been weighing on shares since the IPO.
So what's the news? On Friday, Facebook ads and sponsored stories, the same kind you see on Facebook.com, started showing up on Zynga.com. While this was an something we knew a little bit about, given that Facebook disclosed its Zynga
Running the numbers
So what's the potential revenue opportunity here? Obviously, it won't be huge at first, but we can get a sense for how big it could be by looking at Google's
Of course, this isn't a perfect comparison because of large search partnership Google entered into, but it provides some directional sense for the possibilities at Facebook. With trailing advertising revenues of around $3.5 billion, it's reasonable to think a new ad network at Facebook could add an incremental $750 million to $1 billion to the top line within its first two years of existence.
Foolish bottom line
While we won't see a Hollywood production of The Third-Party Ad Network anytime soon, and it still could be a while before an official rollout takes place, the writing appears to be on the wall. I think that with big-name advertisers such as Coca-Cola
Bottom line: Friday's news is just one more indication that Facebook is getting more serious about driving the top-line growth investors want -- just what it needs to help sway its army of skeptics.
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Brenton Flynn doesn't own shares in the companies mentioned. The Motley Fool owns shares of Ford, Facebook, Google, and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Coca-Cola, Ford, and Google and creating a synthetic long position in Ford Motor. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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