Facebook is coming after Twitter


MySpace is going away quietly.  

Facebook is likely here to stay. Even though Twitter is the new kid in town, Facebook is not going to fade out as last-year's big thing. A foreign investment concern is pumping two hundred million bucks into Facebook, which will give it ample resources to contest Twitter's recent gains in the social media arms race. 

I believe that Facebook has a big lead in the area of monetization. Mike Murphy, former Yahoo executive, has a strong sales team and dozens of key agency relationships. Facebook actually makes some money from its audience via text, banner and channel partnerships such as Career Builder.  Twitter, on the other hand, spends money with no business model to speak of. 

It seems that Twitter's model is to get big and get bought. Here's the problem: Google learned the hard way from buying YouTube that you need a business model to offset basic costs (bandwidth, staff, etc.). Just ask Mark Cuban, who knows a thing or two about this space. GOOG would have to spend billion(s) to get Twitter, then take a hit from market analysts that see it as a cost driver, not a page view generator. 

While Facebook focused on getting big, Zuck gave Murphy the resources to help it learn to to make cash along the way. This is why they secured another round of funding. The company's ten billion dollar valuation gives it a fair shot at independence, at least up to an IPO in 2010 or 2011.

Back in the day, when Google was rising, making money was as important as gaining market share. Back in early 2003, Google had a self-service ad platform (they called it R2D2) that brought in cash for paid search — lots of it over time. Then the company built a great ad sales team and fostered agency relationships. This was the key to its IPO success and valuation rise over time. 

While Oprah and Ashton are all a Twitter, my money is still on Facebook over time. For the average, non-promoter, Twitter will eventually be a time waster for a vast majority of its users. The company will need to launch other spin offs (think Google Maps) to stay relevant and engaging over time. To do that, they'll need money. To get the smart money, they'll have to demonstrate viability.