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Facebook Murders All Internet Properties in Time Online

The Nielsen report on social media use is not a day old, and the press has covered it extensively. But, there is still some analysis worth mentioning. It is too early to know how well advertising will do on Facebook. Its revenue and membership growth have slowed this year. That may be a sign that Madison Avenue has not entirely adopted Facebook as their preferred way to reach people online.

The data show that people spent 53.5 billion minutes on Facebook in May. It was a surprise that Yahoo! (NASDAQ: YHOO), left for dead by many, finished second at 17.2 billion minutes. Google (NASDAQ: GOOG) was third with 12.5 billion minutes, and Aol (NYSE: AOL) properties fourth with 11.4 billion.

The focus of press coverage of this research was the dominance of Facebook and the damage that has done to other properties. Another way to look at the data is that Google did less well than might be expected,but for an obvious reason. It is still viewed as the primary entry point to the internet. Information about the search site shows that “Facebook” is the term most often put into the Google search box. Perhaps that is the trouble. Facebook users make a very brief stop at Google before they move on. Google’s other weakness is its efficiency. It finds the user what he needs, and that is the end of the time users spend on the site.

The most remarkable information from the study is that reports of the complete demise of portals may be premature. Yahoo!, Aol and Microsoft’s (NYSE: MSFT) MSN all ranked in the top ten sites based on minutes for May. That means their use remains dominant enough that they can make the case that they are, as a group at least, essential to advertisers. That case may be more difficult to make as each year passes, but for the time being it is convincing.

The problem the portals have is that Facebook now carries about a third of U.S. display advertising inventory. And Facebook tends to sell its advertising at relatively low rates. That brings down the rates the portals can charge to successful keep their market share, which continues to dwindle.

All of this data leaves one critical question unanswered. How effective is advertising on Facebook? Companies are enamored of its size and the number of members. Many marketers have only recently begun to use the world’s largest social network. That means it is too early in the cycle of advertiser feedback to show whether marketers will be happy with Facebook.

It is hard to live in world where the failure of the number one company is the only chance that those behind it have for success. At least the portals are not far behind Facebook, which still gives them a chance.

Douglas A. McIntyre

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