facebook passes myspace in unique users, but what about advertising revenues?

Over the past couple of weeks, there has been a lot of talk about facebook passing myspace in terms of unique users. Comscore reported that facebook had 123.9 million unique visitors, while myspace had 114.6 million in the month of May. This was foreseeable for some time as facebook created a social networking site with superior functionality and ease-of-use. Throw in custom application development, an exciting friend news-feed, and international expansion, it was a recipe for success.

The important question for me would be, 'Does this now mean that more advertising dollars will flow into facebook?' The answer for now is a simple NO. Reason being - THE U.S.A.

The US has the highest penetration rate of any country in terms of Internet usage at 71%, and the US has by far the most mature Internet market (Consumers comfortable buying goods online, Advertisers confident in a positive ROI on their investment). This means that the majority of online ad spending is by US companies, targeting US consumers. myspace has a majority of it's audience in the US, hence the advertising dollars flow in their direction as opposed to facebook.

However, facebook should not be scared. Although I try my best not to stray off topic in this blog, some brief research into the world economy indicates that economic strength is shifting from the US to other countries, and facebook is well positioned to take advantage of International growth. In fact, facebook has recently expanded into China. China is expected to PASS THE US in terms of total internet users this year. (China is currently at ~210 Million while the US is at ~215 Million). Although it may take some time for the non US Internet market to mature , it seems that soon facebook will be passing myspace in terms of a more important statistic - Ad revenues!