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Facebook: Work in progress (Economist)

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On Aug. 1, Facebook’s shares closed at $20.88—the lowest ever to date. This signals concerns about the social site’s potential for growth and profits. Just about anyone who would sign up on Facebook has already, which begs the question: How will it make money off the members it already has? One idea is “sponsored stories” where companies can pay to highlight mentions in users’ newsfeeds with the hope of spreading via recommendation. Facebook says this is bringing in about $1 million a day now, but experts say sponsored stories is still a new concept that will take time to ramp up. Facebook is also pushing for more ads from small and medium-sized businesses. Another initiative is an exchange where advertisers can bid for ad impressions, which is new to Facebook but standard in the industry.