Microsoft recently invested $240 million equity in Facebook. However, two questions arise from this action. A). Why is Microsoft investing and Facebook and how will it help Microsoft? B). What will Facebook do with the cash?
Microsoft already has a deal to sell third-party IAB-standard display advertising on Facebook. However, investing $240 million into Facebook will allow it to leverage new the populare social networking site in different ways than it did before. I don't see this investment paying off in the short-term, but it will definitely be interesting to see how it plays out over a longer period of time as Facebook is continually growing. It is expected to reach 200 or 300 million users at some point in the future.
To answer the second question, Facebook will be able to use the cash to create strategies enticing new companies to market themselves on the site. Social network spending is predicted to be $1.235 billion in 2007 and $3.63 billion by 2010.
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Source: Adage
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