I’m sure such an announcement is imminent within the next year or two. Sure Google has Adwords and Adsense, but that’s nothing compared to what they’ll be ultimately be able to do. Anyone who has played around with the Trends feature in Google Reader knows what I’m talking about. As an RSS reader, Google Reader has an enormous portion of the market – and it’s growing. For example, at last check 38% of Andy Beard’s traffic was via Google Reader. For LeveragingIdeas it’s more like 55%.

As blogs become a more credible and socially accepted means of journalism, traffics to the big hit blogs as well as those with niche content (and this audiences will continue to rise). Here are just a few examples of what Google Ad Network would knows about me…consider what you as a media buyer might be willing to pay for such knowledge:

Google knows what blogs I read, but it also knows….

• What keywords I personally ‘tag’ blogs with. For example, I tag blogs with particular desires and insights such as ‘competition’ or ‘gift ideas’
• Google knows what blogs and posts are REALLY the most viral. It knows when particular items are shared, emailed
• Eventually Google could recognize when I include a given blog post’s hyperlink in an email sent through Gmail. Plus, it could scan the email’s content for keywords…and recipients
• Google knows the frequency of how often I read particular types of information as well as the consumption patterns that could ultimately lead me to transactions. Hmm…I don’t recall ever buying something online before 12pm…
• Thanks to the ‘share’ feature, Google increasingly knows who the real influencers are in a given social graph

What else does Google know?

In no particular order:

1. It still looks, feels and tastes like 2007. [Brilliant Post]
2. The domain real-estate business is going to blow up. Thrice this week I heard someone describe a business model involving the purchase of high-octane URLs as key to strategy…twice from startups and once from an investment firm. Tactics are already gaining sophistication and personal real estate is key to social graph identity
3. Web 2.0 upstarts not generating cash from either subscription or freemium business models are out like cassette tapes. Likewise, models relying on 1) network critical mass and 2) cash flow from ads become very difficult to fund (Sorry meetoo! SN’s)
4. Niche social networks will become the norm as a medium for brands to connect with customers. Think about it, for relatively small amounts of capital, brands can reap huge ROI numbers. Plus, let’s face it — micro sites are so 2002. Try these impressive statistics: 1) Repeat website visitors are 57% more likely to make a purchase and 2) Based on McKinsey Consulting research, online communities result in customers 9x more engaged and who stay 5x longer than websites without communities.
5. PR goes enfuego. Sure startups are great, but they are nothing without good PR machines. PR firms will be snatched up (see 7) and attractive women vlogers who ‘talk tech’ can name their salary. Attention college seniors!
6. The social enterprise application space will see revolutionary new products. The term ‘enterprise 2.0′ dies off because it’s meaningless jargon used by elder-bubble men
7. The VC model continues to go hybrid. Following pioneers like Founders Fund and Y Combinator, more VCs will emerge, team up and move toward the incubator model. Many VCs will look to snatch up PR firms, SEO, etc as value-added buys supporting their portfolio companies
8. Yahoo stages a comeback. Too many smart people and too many good properties. Someone is bound to do something right eventually. Oh, and they have cash
9. East coast entrepreneurs are going to gain some serious respect. Maybe they’re at a boil on the west coast, but things have only begun to simmer here. Sure we’re a bit slow to show and dress like dorks, but the finance boys in suits will show everyone ‘how we roll’…(e.g. not ad supported and with paying customers J)
10. Undoubtedly my most controversial prediction: Apple and the RedSox. Everyone loves the underdog until the underdog becomes the bully. Look for backlash from fans and sub-par 2008 performances from at least one

Bonus: I get booted from Facebook, write a post explaining how idiotic they are being and my account is re-instated in 48 hours

I don’t have much to say on Facebook/Microsoft deal, expect to say,

“wow, that’s a lot of money.â€�

Nevertheless, I wanted to provide some vaguely helpful insight, so I started digging into a few numbers. My first thought was: I wonder what an individual profile is valued at under this deal? Also, how does that figure compare to Myspace two years ago? Furthermore, what’s the implication for the social networking marketplace?

Web 2.0 valuations are of interest to me because no one has come up with a method for valuing the hundreds (maybe thousands) of social networks and other platforms that exist. While some social networks are more valuable than others due to variables such as demographic make-up, or level of participation/engagement, all social networks share a common element: users. Ultimately, like Google Adsense which pays more for “better� keywords, I see social network advertising (and valuations) following a similar pattern of paying for higher quality users.

But, back to the Facebook deal. The interesting thing is that Facebook has little to no ‘real’ revenue to speak of, minus the guaranteed Microsoft deal and minimal flyer and sponsored group deals. Thus, the most valuable asset of Facebook, just like any other social network, is the number of users.

When Myspace sold in 2005 for a steal at $580M, they had approximately 22M users, meaning that each user was worth approximately $26 a person. In the case of Facebook, at a valuation of 15B, and 49M users, each user is worth $306.12. Thus, Facebook users are worth on average 11-12x Myspace users. I understand the math is shaky, but hey, I don’t see any real brainiacs taking a crack at this…

So at a very highest level, in two years users on the then ‘hottest’ social network were worth $26, now $300+. I’d say that either the social networking marketplace is still an interesting place to be or we’re in a serious bubble. However, the real test for long-term viability will come when the social graph is finally opened-up. Will people stay on Facebook? Will engagement be affected? Will Facebook’s new advertising platform kill it?

We shall see.