FaceSoft: What the VP of Microsoft Sales is thinking

I’m following the Facebook and Microsoft deal closely, this really hammers home a few ideas

Industry confirmation
It’s for real people, finally, Microsoft is putting some skin in the game for the new web, other than the corporate only social computing programs they’ve put together (like Channel 8,9,10) as marketing tools this is the first deployment for the social media tool set. Secondly, this triggers confidence in the social media space as the future of communications, this is for real people.

Why this deal makes sense
I have the pleasure of sitting next to Charlene and we’re bouncing ideas of each other, her predictions (from Sept 24) on why this make sense were spot on 1) The experience and ability to execute online advertising is Microsoft’s strength and 2) For MS, a platform company, this is a key play to bring their slew of developers to now build on the new platform, the web platform. A concept I’ve been discussing for some time.

Why else does this deal make sense? 3) The application development can go both ways, utility widgets (not food fights) that glean information or bubble up network data will be prime suspect to be reused on existing internal apps for Microsoft. Such as desktop widgets on MS Vista, or widgets embedded nicely into sharepoint.

4) Identity: Next, imagine fluidity between enterprise collaboration tools. We already know that many Microsoft employees are using Facebook, and this is becoming an identity tool that Microsoft has always wanted (remember Passport?). Microsoft will experiment with connecting Facebook, looking for alignments to daily work and personal lifestyles, and combine where appropriate.

What the VP of Sales and Microsoft’s Advertising group is thinking
Ok, back to the primary reason why this deal works, it’s because of the advertising. I’m going to do the VP a favor and kick start her (or him) new sales book, here’s how I see the new additions:

Intelligence: User and Network Data from 42million opt-in members. Sure about one third of the profile information may be incorrect, but what we can learn from what they do is invaluable. Google doesn’t have this level of granularity, that’s why we’re more accurate. Your marketing and advertising dollars will be better spent with us

Demographics: If you’re trying to reach the educated, white collar, engaged, interactive, and growing segment of North America, Middle East, part of Europe and Asia then you’ll go with us. We can also segment by band or market to isolate and make your marketing spend effective. Need to reach a male in detroit that is conservative and single, yeah we got that.

Community in a box: Tired of trying to kick start your own community? Building those engaging social communities on your own web domain is a challenge, who wants to deal with IT or go through the motions of getting users to come? We’ve got an instant community you can interact with and engage with.

Brand Experiences
: Advertising not enough? want to build true interaction around your brand and get customer and user feedback? We’ve got that too, you can purchase a sponsored group in Facebook for 100k, which is just a drop for most advertising spends at the Fortune 1000 level. You’ll get your own branded community, and we will cross promote from other areas in Facebook. Users will be engaged, self-identify, and get closer to your brand, and yes, you can deploy an eCommerce application in the group.

Flexibility: With the smallest flyer, to a branded sponsored group, we can custom tailor any marketing initiative to correctly fit your needs, and those of the Facebook community.

Data and Reporting: By far the most important thing for you is to prove the value of your advertising and marketing dollars, by using our platform we’ll tell you who you are resonating with, when, and by how much. You’ll be able to course correct any campaigns in real time. Google doesn’t give you the personal and network data. Numbers are safe, and we know your boss is risk averse.

Holistic Strategy: Already deployed advertising campaigns on the web (maybe with us) we’ll help from a strategic media partner sense and take a look at your entire holistic strategy. Work with us to deploy on Microsoft properties, our search engine, affiliate partners, and Facebook.

But what are the risks?

With any shiny object the cool kids get on it first, play with it and the adoption process starts (read the theory on the personas of early adopters), over marketing and too many branded invasions (MySpace may be suffering from this) causes the cool kids to move away –with the platform provider unaware or not caring while cashing in– taking their groups with them. Over advertise and destroy the experience results in a ghost town of billboards, popups and targeted ads.

Although I’ve been quoted by the press before, today is a milestone as this was my first quote as an analyst in this Bloomberg piece answering why this deal makes sense, and nicely positioned at the top of the article.

Do you need to learn more?
Thinking of deploying in Facebook? then first read What the Web Strategist should know about Facebook. Also, I publish a weekly digest of the Social Networking industry (I add my insight as well), stay up to date and read these every Wednesday. Also, I’ll be keynoting this upcoming Facebook conference in December in Seattle, hope to see you then.

  • Jeremiah –

    Microsoft has a long ways to go in dealing with the agencies and organizations that manage campaigns for their customers. There are really simple billing issues that they don’t get right, and their systems typically break down when you try to run a campaign that’s complicated (lots of keywords each targeted at lots of geographies).

    What I would be worried about as VP Sales at Microsoft is low click-through rates and low conversion rates for Google’s advertising on MySpace, and what on earth Microsoft can do to make Facebook any different or better. You look at popular Facebook apps (e.g. Scrabulous) with their plaintive messages advertising $0.50 CPMs and wonder how on earth you’re going to make any money on this.

  • Edward

    The opportunity here for Facebook and Microsoft advertising is the intelligence that can be provided up front and in-flight.

    Advertisers want to spend their money well (50% of it works, but they’re never sure which 50%) the intelligence gleaned is a differentiator.

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  • Great analysis. Another aspect MSFT bring to the table is a huge inventory of ads. To successfully implement Facebook’s targeting you need enough ads to fill all the niches.

  • This purchase makes sense to both parties. For Facebook, it shows that their market value is close to $15 billion and they are now associated with one of the largest brand names in business.

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  • Jeremiah-

    As is expected, you raise excellent points. Great analysis of the deal. I fully agree with your analysis of Facebook’s potential use in the enterprise. I’ve been thinking the same thing about the collaboration possibilities (http://www.ebizq.net/blogs/archives/enterprise_and_web_20/) ) and have been waiting for this deal for a while.

    Additionally, though, I would add that this opens the door for web search (Microsoft’s Live Search) to be integrated somehow into the Facebook platform in the future and then the convergence of social networks and search (i.e., competing directly against Google) will get really interesting.

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  • I had a hard time getting past #1 to get to all of your great points! MSFT has been, and is, miserably behind Yahoo! in being able to provide relevant targeting across their network. As for FB being their sandbox or incubator for new ad products, they already have access to better real data with the Aquantive acquisition; and frankly haven’t even opened the door yet to peek in (according to folks who would know). Through the Aquantive lens they could see billions of impressions, billions of clicks, and millions of conversions. Who, what, why and how of all of it, and with the DrivePM layer, behavioral and segment performance aligned with Claritas. With FB, they don’t yet know how the community is going to react.

    I absolutely think it was a great decision to dive in with FB, I’m just not sold that they even know how to drive the sports cars they already have in the garage.

  • I expected Microsoft to get the deal – since they already had the rights to serve US ads on the site.

    I see this as a brilliant move on Microsoft’s part because they can now leverage two recent acquisitions:

    AdECN – an auction based exchange for display advertising

    aQuantive – a display advertising network

    With the recent purchases in the display advertising space (Google’s purchase of DoubleClick still has not been approved as yet), this gives Microsoft a leg up in display advertising both inside and outside the US.

    Smart move.

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