Facebook Back of the Envelope Calculation I

This recent comment on this Hacker News thread about the validity of FB's $15B valuation inspired me to do some quick back of the envelope calculations.  The relevant part of the comment said:

If it can convince major brands that Facebook eyeballs are worth the same as traditional advertising (in effect sell them CPM, not CPC - "Facebook is the new TV"), then Facebook will do quite well. That's a very tough sell for smaller players, but it might not be impossible for Facebook.

The comment's author cites compete's FB #s at about 30M users with 350M visits/month at an average stay of 15 min each.  That gives us:

350M visits/month * 15 min/vis * 1 hr/60 min * 12 months/year ~ 1B hrs/yr

At 30M users that is around 33 hours per year for each user.

American Idol apparently sells a 30 sec spot for ~$750K with about a 30M audience.  That is about same size audience and demographic of FB, so let's just go with it for now. 

$0.750M/30sec * 60sec/min * 60min/hr = $90M/hr

At 30M viewers, that is around $3/hr per viewer.

If we put that together we get:

$3/hr * 33hr/year ~ $100/year per user.

And then with $30M users, we get our answer: $3B/year.


Please let me qualify that I am not trying to imply any of the following:

• That FB's real value lies in its ability to deliver TV-like advertising.
• That FB could even get this kind of money for TV-like (brand awareness) ads, although this recent article about CBS online ads vs TV ads is interesting in that respect.
• That FB should even go in this direction.

All I'm trying to do here is examine one valuable asset FB definitely has--the daily attention of a large group of people--from one angle.  This one angle is to look at another thing the FB user base's attention is yielding in the marketplace. 

Btw, I did a second calculation, but this post is already too long, so I'll write it up tomorrow.

Update: additional comments can be found here.