I spent a great deal of time last night interacting on the Hacker News discussion boards instead of writing my blog posts. I did have a very interesting conversation around Facebook and their monetization strategy (or lack thereof), though, with HN user unalone.

Like a good blogger, I’m going to repurpose most of what I said there for this post.

The thrust of the conversation centered around my frustration and anti-Facebook bigotry. I realize now, after this conversation, that the source of my Facebook frustrations aren’t readily obvious to those who haven’t been following my writing for several years, so to summarize – it has to do with the fact that they seem to have an adamant refusal to reach out and grab the low-hanging fruits in terms of monetization.

But beyond the scope of just that particular conversation, it isn’t just Facebook that frustrates me: Twitter seems to be afflicted with the very same disease.

Just Because it Isn’t Sexy Doesn’t Mean it Won’t Make Money

I wrote a post last week entitled: “Twitter: Here’s a Half Billion Dollar Idea.” I still haven’t gotten a phone call from @biz and @ev, and surprisingly the post got relatively very little traction and engagement.

The thrust of the post was that Twitter is sitting on what is potentially $1.4 billion a year in revenue by allowing the act of link shortening to be farmed out to third party developers. The math on this calculation was well documented and very realistic.

Perhaps the reason behind the lack of interest in my post was that it was too full of math, or perhaps (and this is what I see as the the more likely scenario) the solution to profitability wasn’t quite sexy enough.

Putting ads on a page where you’re sure to get engaged pageviews isn’t exactly an earth-shattering idea.  Most bleeding edge technologists scoff at business plans that revolve around AdSense as the answer to the “how are you making money with this crap?” question.  The truth is, though, with enough attention and engagement, that solution works – and given the volume of attention and engagement in Twitter, that solution hands down would work.

It would certainly would work better than the ridiculous “definitions” ads that pop up on the Twitter website sidebar.

Facebook is Similarly Afflicted With the “It’s Not Sexy” Disease

Yesterday, Venturebeat chronicled Mark Zuckerberg’s desire to hire anyone worth hiring in the tech world – it spawned  a conversation on /SABackchan, and the aforementioned conversation on Hacker News as well.

To me, it sounds like a recipe for failure. Fellow SiliconANGLE member Nate D’Amico felt it was part of talent land grab.

“Lots of folks from Yahoo! and the Big-G in the job market or looking to be if an opportunity is to arise,” said Nate. “It is also probably a good sign that revenues are ramping enough to justify heavy hiring.”

I still don’t see it as a sustainable strategy for fiscal growth, though, and I said as much there and on the HN thread, which caught me a lot of flack. My bearish attitude is and was often interpreted as an ignorance to the amazing user growth momentum Facebook is experiencing now.  That isn’t the case – I acknowledge that they have momentum now, but it should be understood that momentum won’t last forever.  Aside from the fact that they could at any moment be taken out by a competitor or cadre of competitors, there’s also the immutable fact that at some point they’ll run out of users to keep growing with, and the virtual ponzi scheme all growing companies experience in spending the proceeds of runaway growth will end.

Looking Beyond Users and Pageviews is Necessary for Fiscal Sustainability – and Facebook Isn’t Doing That

I wrote on this at some point when I was at Mashable – when we were all theorizing as to what Project Beacon was going to end up being. My theory, which was way off as it turns out, was that they were building an offsite behavioral ad network that webmasters could use in the same way they use AdSense. I am beginning to sense that they’re slowly crawling towards this now, but they’re a long way from it, and it’s the one killer app that could strike a blow at Google’s AdSense and capture a significant share of the worlds web ad market.

Instead, they’re content to run what basically amounts to poorly targeted remnant ads inside the site, where they’re least effective.

To help understand what I mean by that, I’ll give an example from an unrelated series of posts I did way back when splogging was a major scourge on the net. Remember those search engine results we were all getting several years ago that look like a monkey wrote the blog posts? You’d search for "underwater basket weaving" and you’d get a splog with that as the title, and nonsensical computer generated blog posts surrounded by AdSense ads?

AdSense worked and made money for the sploggers because the content wasn’t what the user wanted to see, and most surfers are as likely to click a relevant link as they are to hit the back button.

Facebook content is too good for ads to work.

When I log into Facebook, I’m looking at what I’m there for because it’s content tailored to me. All those pageviews mean nothing for ads because I never get bored enough with the content to click on them.

The wilds of the web are much different – content on the web coming from search engine results has varying degrees of relevance to me as a searcher, and ads are much more likely to be clicked.

All this to say that Facebook growing by leaps and bounds (as is Twitter), and they may have the greatest momentum ever, but if they don’t get serious and look at the basics of how their monetization model works, they’re not going to get anywhere. I’ve been banging this drum since early 2007, and it’s frustrating as hell to see so much squandered opportunity. Going on a hiring spree and re-arranging the deckchairs on the user interface won’t fix that problem, and that problem is the crux of what makes a business ultimately successful… money.