Where’s Facebook going?

This Friday came the astonishing news that Facebook has pulled in almost $1.5 Bil in new investor funding, most of that from foreign investors. Though the article also brings up other questions that should be of interest to Wall Street and other potential IPO companies on how to raise capital, we need to also think about a very simple question. Where’s Facebook going with that money?

Consider that investors in these pre-IPO markets are not only sophisticated but they also have the capacity for a higher degree of risk than regular post IPO investors. Which means logically they should be really convinced on the growth potential to offer up that kind of capital.

And that Facebook should be able to actually absorb that kind of money in its fullest. After all it is one thing to spend $1.5 Mil, but how does a pre-IPO company spend $1.5 Bil.

Think about the fact that at the core, Facebook is just another website but one that allows people to communicate with one another- yes that’s another way of calling out a social network. In a previous post, it was highlighted that Facebook vaulted past Yahoo to become the 3rd biggest US web property in terms of valuation. But that still explains little on how they will use this fresh infusion of capital.

One of the most relevant data points to look at may be this little chart from Nielsen that highlights the top 10 trends for Global and US internet companies. Clearly Facebook is starting to catch up with Google in terms of unique users, but one of the important points from Nielsen NetView is the time spent per person. Facebook scores 3 times over Google in that department for the US market. Which means that in the world’s single biggest advertisement market, it is a goldmine for advertisers. Which advertiser does not love a captive audience?

Now let’s look at another data point. This rather interesting article has at the bottom, a comparison on time spent online at Social Networks/ Blogs and Videos/Movies. Social Networks are outperforming the latter category by a factor of 5. Being the king of the hill in Social Network,  this data can easily be extrapolated to Facebook. So it appears that the real target of Facebook is the $380 Bil Worldwide advertising market.

Given the migration that is happening in the advertising industry from print, radio and tv to the web, led in large part by the search driven business model of Google, Facebook certainly looks like a top destination for advertisers in the coming years. Of course it also puts it squarely in the cross hairs of Google.

Finally the time spent online also explains a couple of things – how Facebook grossed $1.2 Bil in advertising related revenues and a net of $355 Mil in 2010 as Reuters reported. And how an asset light company is being valued over $50 Bil

So where’s Facebook’s next stop? Or will it ever?