Happy New Year. It’s been a while since my last post, in which I explored conversion as a potential alternative revenue model to advertising for web startups. In this post I want to explore a way in which Facebook could make money from conversion.

Remember that like Google, Facebook already enjoys a large user base because of a free product that it offers to its users – social networking. As I have posted before, what it now needs to do is to leverage that user base and traffic to offer a service to businesses for a fee – preferably a service other than advertising and therefore away from Google’s turf. I am suggesting in this post that such a service could be conversion – i.e. helping its paying clients convert eyeballs to users once visitors arrive at those clients’ websites.

With 150 million active users and rising and a great share of overall Internet-user attention, Facebook certainly has a major asset in its hands, which it can leverage to offer a service to businesses. With its “Login with Facebook” service, Facebook is already well on its way to doing this. Apparently Govit.com, an early adopter of Connect, saw 58% of new users choosing to login with Facebook. That is huge. However the problem Facebook has is that it can’t charge businesses for this service. If it did, adoption would be very low. To build on the feature, my thinking is that Facebook could enable visitors to a website to see which of their friends or friends’ friends already use the service and request to see or ask them what they think of it. Each of such requests by visitors could then be charged for by Facebook, or perhaps only when a response is received.

The beauty of using Facebook for this as opposed to something like Twitter is that the former is stronger for identification purposes and any abuse by users should be relatively easy to police.

As a revenue earner, I think the potential is huge here for Facebook, although I suspect that takers will be limited to businesses who actually charge customers for their products/services. I don’t think conversion through Facebook would offer much value to a blogger for example, whereas the same blogger might be willing to spend on Adwords in order to attract eyeballs to his/her blog. Some might say because of this that Facebook Convert (there I’ve even named it for them) can never be as big an earner as advertising. I say perhaps not as big as advertising is for Google but certainly better than advertising will ever do for Facebook, because as many have noted before me, whilst advertising perfectly compliments search, it is not such a good fit for social networks – it is just not that well-aligned with the user’s purpose for being on Facebook or any other similar site.