Who’s sitting on something that could be valuable but is not using it? Facebook.
Last night at the Facebook press and analyst event, I had the opportunity to meet with product managers who asked me for my take on the Facebook strategy, which I gave a number of opinions. I did tell one product manager that “Facebook’s tailbone is search, you guys are sitting on the data and it’s not doing anything”. He spit out his drink into his cup, which got the attention of the PR “handlers” resulting in a chuckle from Scoble (being more disruptive than Scoble at a press junket is a feather I’ll now finally put in my cap). Some FBers told me they’d use that phrase to drive future innovation internally, so I wanted to ink this so it can be shared.
Tailbones on humans are a reminder of a feature that’s not being used, and the same thing applies to Facebook. While the product manager reminded me that there are millions of searches done on Facebook each day, I clarified that was often for finding profiles and pages, and the odd external search feature they have. Facebook doesn’t allow regular consumers to easily search the contents of their newsfeed, and that of their friends. If you see something interesting you can bookmark the page in your browser, or hire an expensive brand monitoring company at $100k+ a year, which of course, no consumer will do. While I’m sure there are a variety of apps that can cull and organize the data of your feed and your friends, it should be a native feature.
Facebook is on track to being about a $4 billion dollar company this year, with a Market Cap of $61b but that’s still dwarfed compared to search giant, Google. To put things in perspective, Google’s revenue was nearly $38b for 2011, with a current market cap of $231b and will surely increase year to year. Facebook allowing for search tools to be used within the network could quickly disrupt this market, allowing consumers, and brands to get additional value. The data Facebook is sitting on can easily surpass the short term memory that the Twitter search tools offers, with truncated content.
SO what could Facebook build? They’re sitting on the world’s largest set of social data of people I actually know and care about, not some distant celeb in Twitter or a famous photographer in Google+, and could derive a tool that would help me to search my friends content and even my prior archives. This social search tool would also expend beyond their current search tools, I searched for top restaurants, but it returned pages, apps, and then finally posts of people I follow who had the crude word ‘restaurant’ in it, it really doesn’t show intelligence.
To really hammer in my point, I’ve posted pictures of my Facebook visit last night on Google+ as it will be easier to find in Google, Bing, Yahoo, and any other search engine that evolves. Facebook is sitting on a trove of social data that hasn’t fully surfaced, they’ve an opportunity to evolve and truly be a dominant force in finding content –not just served on a newsfeed.
When Facebook launches a worthy search tool, it could be a strong contender in the search wars, evolve that tailbone.
In business school, case studies of successful companies often involve a story of an innovator who created physical products and services, mass media, or services at scale for global consumers. Yet I’d assert that web-based Facebook is one of the most brilliant business models we’ve ever seen. If you use the service, Facebook has you to thank for all your hard work.
Despite yesterday’s IPO closed at nearly opening price, it’s important to pause and think about how this company’s market cap reached $100 billion (for context, Pepsi is at par at $106b). We’re already seeing many become wealthy, from newly minted millionaires in brand new M3s at the local car wash in silicon valley, to the investors, VC, and ecosystem that will benefit from the revenues, we need to pause and think why.
So what is so important to pause and think about? Why do I say the Business Model is “Brilliant”? Facebook’s business model smashed the traditional manufacturing style we see with consumer products, and instead built a ’consumer platform’ that enabled many around them. In fact, the Facebook business model is brilliant for the following reasons:
Brilliant because the users do the work. In many companies, hiring paid or unpaid interns is a source of scale, or even off shoring work to developing regions. In the case of Facebook, there are 900,000,000+ unpaid members that are generating meaningful content and value to each other. In fact, official Facebook stats indicate that 526million of them are active each day, many of which are using mobile devices and applications to connect to Facebook as they traverse the world. While Facebook continues to grow, third parties are observing that the rate of growth may retarding, what’s important to remember is that most of the commercial base that brands want to seek are likely within Facebook.
Brilliant because the brands send the traffic and inject the revenue. That’s right, this couldn’t have been done without brands. In fact, as one of the largest monetary streams for Facebook, they are spending dollars to reach the commercial base inside of the Facebook experience (despite GM pulling ads). In fact, Altimeter research indicates 90% of corporate websites link to their social media accounts, showing how 10+ years of hard earned traffic spent on SEO and SEM with Google has now been shifted to send that traffic right to Facebook.com. It goes without saying the partner ecosystem of Social Media Management System has also contributed –and generated associated revenues.
Brilliant because a small company stayed agile. Despite revenues being $3.7b, their cost of goods is only $860m. Facebook has published their employee base is a mere 3500+ employees at their Silicon Valley HQ and beyond, a small cadre compared to headcount of Google (33k employees), Apple (60k), and Microsoft (90k). This lean and mean team was able to stay hungry, focused, and innovative to constantly roll out new features and products (both loved and hated) that captured the attention of the world. Even large software enterprise companies like Salesforce have modeled their software to emulate the features inside of company. Despite that there is no shortage of investors, the leadership team was able to maintain control and act against Mark’s clear vision, hopefully evading some corporate bureaucracy.
Facebook Success is Here Because of Your Contribution
This business model is notable as it involved millions in creating a consumer company at tremendous scale (without traditional, manufacturing, distribution or a person-to-person sale), in fact, anyone who’s used Facebook as a consumer, or as a brand marketer should also be to thank. Now that the IPO has happened, those who have purchased the stock may feel even more connected as they have some financial ownership to the company.
The Facebook business model is brilliant, as everyone around them helped to do the work.
Beyond Facebook, Google+ a Threat to Twitter.
While the most obvious competitive comparison is Facebook, we’re seeing the early adopter tech crowd dominate the top 100 lists, and I’m seeing some similarities to Friendfeed. In reality, I believe that Google+ could actually be more of a threat to Twitter than most realize, as it organizes fragmented conversations on single threads. In any case, we’re seeing some of the early tech adopters port their networks over, and a few celebs indicating some early strides –yet don’t jump in yet, we see this behavior with many tools.
Strength: Finally got basic social networking features right by hiring seasoned staff, mainly cloning what’s worked for other social networks. Legacy of building scalable systems, nearly unlimited amount of resources, existing advertising, analytics, and ad buying network.
Weakness Lack of integration with other Google systems, existing feature set limited and not compelling enough for mainstream users to set up camp on yet another social network. Significantly behind Facebook and Twitter’s global reach.
Opportunity Integrate with all Google features also including search (which would spur on brand adoption, and ‘free’ marketing), email (The first social network) applications platform (they already have a thriving developer community)
Threats Feature war: Facebook has ability to enable search features and can blow out their inbox features since they have the developer chops from Friendfeed, Gmail team. Secondly, Google+’s features are status quo, that enable email platforms to quickly catch up.
Strategy: Five Ways Google+ Can Become Mainstream:
Now, I’d like to give five strategies that Google can deploy to crank up mainstream adoption, here’s how:
1) Comment Management Features
First of all, I’m already seeing their commenting system break with users with a lot of circles, the comments aren’t easily sortable, nor can you drive signal from noise –chronological ordering isn’t sufficient. As they eventually launch brand pages, and attract more heavy users and influencers they will need nested commenting features, ability to see top responses, and other ways to highlight signal from noise. This low hanging fruit is feature upgrades –and should be done quickly. By doing this, they actually continue to compete with Twitter, shifting rapid conversations over to the Google+ platform.
2) Integrate Search Tools
Search features are Google’s core DNA, however the current search tools doesn’t easily search content within the Google+ stream (it’s limited to finding people, images, circles). Because Facebook features lack any significant search abilities and Twitter’s search is limited to a short time duration this is a significant competitive advantage as users can rely on this platform for long term retrieval of information. On Google’s over arching strategy, integrating this data with their existing search tools is obvious –it’s more fodder for their engines.
3) Enable an Applications Platform
Google has an active developer community that already encircles their camp, in fact they should offer developer platforms and integrate opportunity to integrate. Facebook and Twitter developers are frustrated with a ‘one-sided’ relationship and want to spread their eggs into multiple baskets. As a result, they will be glad there’s competition between platforms which will give them new opportunities and improve their relationships. As a result this influx of new use cases will fuel adoption of the platform and we’ll start to see brand sponsored apps that will result in corporate marketing promoting branded Google+ Brand pages (more on that on #4)
4) Launch Brand Pages (no, really) Google suffers from at least one major flop for every social networking flop, and this year it was their closing of brand pages in a very messy way. While there are few early adopter test brands like Ford that are still active, most brands pages have been sunsetted. Expect Google to offer a new set of brand pages and vanity URLs with application features, and coupled with their existing analytics products and web advertising network. If they do this right, the brands will do the marketing for them, here’s how it will go down: brands will jump on, their competitors will say “quick we need a Google+ strategy” and follow suit, then they’ll race to see who gets the most circle members and turn their marketing engines on. The best case scenario for Google is having brands link to their Google+ brand pages from their corporate homepages fueling mass adoption.
5) Integrate Google+ into Search Engine Results Pages
Finally, the Coup de grâce, will be for Google to announce (or prove) that what happens in Google+ will integrate with google SERP pages. Because Twitter and Facebook have limited search tools and their use cases are limited to social networking or social utility they will not have a competitive edge. When they do this, X things will happen: 1) Early adopters and bloggers will immediately invest more to be first of mind, in fact, expect news to break within Google+ from bloggers and press. 2) Brands will heavily invest in their Google+ brand pages, fueling more adoption from corporations and their agency partners (we know social media teams already spend on advertising) 3) Backlash from the industry as anti-trust and anti-competition will occur.
Love to hear your thoughts, leave a comment on what you think Google’s next moves should be.
Report Snapshot (full report embedded below) Altimeter Group conducted research, and gleaned input from 34 vendors, agencies, and experts, to determine success criteria and develop a roadmap for Facebook page best practices. We found Eight Success Criteria for Facebook page marketing, and then tested the maturity of 30 top brands across six industries.
Our heuristic evaluation revealed that brands fell short – nearly half of the brands we reviewed (14 out of 30) did not fully leveraged social features to activate word of mouth, the hallmark behavior of social networks. Within this immature landscape, a few brands were on the right track to successfully harnessing Facebook page marketing. Brands like Pampers, Macy’s, Kohl’s, and AXE increased engagement and activated word of mouth through advocacy and peer-to-peer interactions, or solicited business call to actions that result in transactions.
How should brands approach their Facebook page marketing? We asked the experts.
Research means digging in deeper to find the truth, and we know our place in the ecosystem is to work with others. As a result, we had a call for submissions, and we received input from 34 vendors, agencies, brands, and individual experts. We read blog posts, looked at examples, and reviewed case studies.
8 Success Criteria for Facebook Page Marketing
After pouring over the data from the ecosystem we’re part of, we found a clear pattern. There was a consistent set of criteria we heard from the industries experts, we found the following 8 criteria:
Then, we put 30 brands to the test to find out who’s doing it right –and wrong.
We then took that criteria, created a scorecard with quantitative criteria, and measured the world’s top brands on their Facebook efforts to find out who’s doing it right, and who’s not. In the embedded report, you can download many of the high level findings, as well as see screenshots, comparison by industry and read our recommendations.
About the Altimeter research team.
For this report, I’m very thankful to work closely with Altimeter Partner, Alan Webber (bio, Twitter), who served as Editor. Alan is a multi-talented guy who stems from Forrester with a strong background in web user experience, and was able to tighten down the scorecard methodology which we’ll use to help clients. Christine Tran, Researcher (blog, Twitter), lead a detailed and thorough research process, always kept the ball rolling and is a consistent and reliable source of quality work, long hours, and positive energy. I’m very thankful for both of their consistent help!
Our belief in Open Research: It works when you share it
We want to be facilitators of the ecosystem and want to work closely with the marketplace. We’re publishing our report under Open Research, at no-cost under creative commons licensing, this report was 100% funded by Altimeter Group, we also do our best to disclose our financial relationships. To make Open Research work, we hope you read it, spread it, and use it to improve. If you found this research report helpful, please embed it on your blog, email it to your teams, and spread it to others.
This is one of those important posts to forward to your marketing team, agency partners, and to Facebook themselves.
While there’s been plenty of coverage about user privacy concerns, attention on Facebook’s changes on brands hasn’t been adequately covered, this analysis is intended to unravel what’s at stake –and what brands should do. I’ve spoken to a handful of brands and their representatives to learn what’s eating at them.
Summary: Facebook has quietly launched ‘Community Pages’ Hampering Brands
Facebook has launched several new policies and features since the F8 Conference ‘Crusade of Colonization’ which has resulted in a large backlash from media around user privacy. It’s not clear if beyond the vocal media if users will leave the site in droves. Perhaps more importantly, Facebook launched “Facebook Community Pages” (read the official post) a feature that aggregates content from wikipedia and Facebook wall posts. Think of it as a cross between Wikipedia with user comments –sometimes unwittingly. These changes cause confusion for users, diminishing control for brands, and strains on the already torrid relationship between Facebook and brands.
Motives: Facebook Must Go Open To Increase Monetization Inventory
Facebook continues to leap ahead of their competitors in terms of innovation, however that often comes with risks to their community. Here’s why they are making these moves:
At Facebook, Innovation Means Asking For Forgiveness Later. This is a pattern. Facebook believes in their vision and launches innovative products (by innovation, I mean features others have not dared to do first) and then asks for forgiveness later. They often move faster than their community is ready, from going for .edu to public, exposing wall posts features, to Beacon, they push forward in the name of innovation.
Aggregation is a Cheap and Effective Way of Creating New Content. It’s a brilliant model to repurpose existing content from other sites, as it’s low-cost for Facebook. However, the downside is that content aggregated from Facebook members wall pages may not have been intended to be created as public.
Resulting in More Content Inventory for Advertising Opportunities. Facebook knows that in order to compete with massive Google, they need more content to be public. As a default, most features and content types are now being published in public, and you’re seeing why they’re aggregating existing Wikipedia content to drive up SEO and advertising revenue. They must be open to win the end game of monetization.
Matrix: How Facebook’s ‘Community Pages’ and Privacy Changes Impact Brands
Impacts to Brands
What No One Tells You
In the spirit of Wikipedia, Facebook launched a feature that aggregates content from Wikipedia and public wall posts from users
This has created confusion among users as many iterations of a single brand may spread from ‘official’ Facebook pages to now community pages. (see example from Arbor Day) Additionally, this causes angst among brands who were told to invest.
Facebook struggles with being public, so their strategy is to aggregate the public web into Facebook. Yet expect brands to revaluate spending time and money in Facebook as trust has been broken.
Aggregation of Wall Comments
Content from users public wall posts may be aggregated to Community Pages. However users may not: 1) Know the content is public, 2) It’s being aggregated out of context
There are a few embarrassing examples of people’s content who are being aggregated such as “My Stupid Boss” as well as content being aggregated on Community Pages that are not contextually relevant.
A search powerplay for Facebook. Facebook’s betting on more public content by aggregating existing content, which in the long run will influence brands to come to Facebook as SEO scores increase.
Wikipedia content about any topic (including that of a brand) is now being fed into Facebook Community Pages
Less control for brands. Brands already struggle with updating and keeping accurate their Wikipedia pages, now the content will be spread to more locations. There appears to be a nod that Facebook will allow this content to someday be community edited.
To be successful, brands must keep their Wikipedia pages fresh and accurate. Expect savvy brands to ignite their advocates to manage this as Wikipedians have a general disdain against brands.
Facebook Community Pages aggregate in corporate logos onto these webpages, often without brand content.
These real logos may cause confusion for users as they could mistake Community Pages to be the official page over Facebook pages. Legal department sending questions to the social strategist who’s not in control.
Expect embarrassment and frustration for social strategists where the Community Pages have more followers than Facebook pages.
Lack of Commenting Ability
The Community Pages only aggregate content (some which is out of context) and do not allow for two way dialog in the form of comments
Brands that have incorrect content on Community Pages, or brand detractors are not able to respond directly.
This will cause frustration for brands as they try to respond into the aggregated wall post section from their own Facebook Page, causing continued confusion.
User Privacy Woes
There’s been much written (read the Q&A with a FB exec) about the privacy woes as more content is public, with complicated privacy toggles and controls.
As users become frustrated (albeit, a small vocal amount), trust in Facebook will diminish, and brands will also lose interest in investing in Facebook.
Although consumers say they care about privacy, but in most cases, don’t expect them to do anything about it until it impacts their personal lives.
Communication With Brands
These Facebook Community Pages (as I’m told) were not communicated in advance to brands, and they were generally caught off guard
Partnerships are built off trust, and trust has been diminished by this recent move. I’m told (but can’t confirm) that Facebook has generally responded in email and sent a link to a web form and answered a Q&A (Which I’ve read, but will not publish) to brands.
Further degradation in trust as communication is not met both ways, brands will seek other opportunities. Such as investing in community platforms on their own sites.
More advertising inventory has been created by Facebook as Community Pages already have ads on them (once you’re logged in, see right nav).
For brands that are not active in Facebook, they may see this as a “highjack” model in the recent criticisms of Squidoo, Get Satisfaction, and Wikipedia. They’ll be forced to participate as communities rally around their community pages.
The savvy brands are already active in Facebook, and those that are hesitant will continue to approach with caution (now that trust has been broken). If Facebook continues with Community Pages, expect this increase in inventory to offer increased revenue streams.
Facebook has Diminished Relationship with Brands For the last few years, Facebook has told brands to invest in their relationship through advertising, Facebook Pages, and connecting with applications –yet recent moves erode the relationship.
The Trend Continues: Power Shifts Away From Brands. Nothing new, more of the same: power continues to shift away from brands, read how some colleges are ‘freaking out’ by the lack of control. However what’s different is that in the past the ‘Groundswell’ as an unstoppable force from customers, brands weren’t expecting their power to be eroded from their media partner, Facebook.
Brands Frustrated As Community Pages Outnumber Official Page. Facebook must become more open, and expect community pages to continue to be created. (see Tweet testimonial) I’m told that Facebook will migrate community pages to your official Facebook page, but more community pages are continuing to be created.
Burning The Bridge To Revenue Island Will Take Considerable Repairs. Because these Community Pages were launched without the consent or preview from brands, skepticism has emerged on trust of these new features. If the long term strategy of Facebook is to generate revenues from brands (I know of a 7 figure deal in the works that could be re-evaluated) due to these changes. It’s important that Facebook go back to the core values that communication foster trust, which fosters relationships, which fosters partnerships, which fosters revenues moving.
What Brands Should Do: Although I like what Dave Fleet has had to say, there’s little advice has been offered to brands, here’s how companies should approach these changes:
Work as a Collective. Nothing like using the power of community in order to influence a community that has power of you. Brands should connect to each other to both share intelligence, develop a common voice. Start with GasPedal’s Peer to Peer ‘Social Media Business Council‘ and the WOMMA trade organization, you’ll also find like-minded marketers in Marketing Profs, who may also offer an SMB perspective the others do not. By joining with your peers and approaching with a common voice, brands will be able to force their hand. You’ll have to work together.
Monitor Your Brand on New Assets. If you already have a PR agency gleaning insights or have a listening platform in place, turn the listening devices towards Wikipedia and the newly minted community platforms. Setup alerting systems as changes on Wikipedia will now impact Facebook Community Pages. We’ve listed out the listening vendors in our latest report, Social Marketing Analytics.
Spread Bets, Bring Community Closer To You. With power diminishing, brands shouldn’t place all their bets in just a few social networks. Instead, conduct socialgraphics to find out where your customers are, then invest in other networks. Furthermore, start analysis on building your own community off your corporate website for customers, advocates, and lifestyle communities. Give customers a choice to interact with others on your own properties rather than relegating to Facebook alone. Look at vendors like Mzinga, Awareness, Lithium, Kickapps, Telligent, Jive, Pluck, Liveworld, and beyond.
Develop An Advocacy Program Now. I strongly insist that advocacy programs are key for today’s brand. They may have access to update Wikipedia pages, influence prospects, and become brand advocates when companies are unable to scale. Use this advocacy program checklist to get started now. See how vendors like Zuberance, Expo TV, and in some form, Bazaarvoice can spur forward advocates voices and aggregate.
I’ve spent a few days sorting this out, and reading as much as I could, however if you’ve got more to add, please leave a comment with your observation, or suggestion for brands below. Update: I’d like to thank LaSandra Brill, a strategist at corporate who was a great source of information. I rely on her for her perspective, and I think you should too, follow her on Twitter. I like how Peter Friedman has made clear points on how Facebook must live with their world, both in comments and his latest post.
Update May 27th: Roy Young, the head of Marketing Profs, has conducted a survey of users and marketers about Facebook’s changes in privacy, which are related to the community pages changes. Their findings indicate that trust has eroded in Facebook, and Marketers were more concerned over privacy than consumers. The most important findings is that marketers will ‘somewhat increase’ their investments in Facebook in next 3 months.
Today marks yet another important era in Facebook’s saga, they are expected to make a big push to extend the Facebook experience to every webpage.
Today, I attended the f8 developer conference hosted by Facebook, they’ve made some key announcements on what they want their developers to do. While there’s a lot of news sources and bloggers rehashing what was announced, I’d like to go a step deeper and talk about the ecosystem impacts, opportunities and threats, and provide some insights. Here’s my take:
Matrix: Facebook’s Crusade of Colonization
I just finished watching the keynote, while there’s a lot of folks rehashing news, my goal is to tell you what it means, and the impacts it has.
What It Is
What No One Tells You
An open protocol that’s designed to aggregate all social activities from your friend back to Facebook
This makes Facebook a social inbox, regardless of the service: Pandora, Yelp, your corporate site
Email providers like Gmail/Buzz, Microsoft Windows Live, Yahoo, and AOL all want to be those destinations, now competing with 500mm users in FB
Facebook wants to be the starting point for your world –the new email inbox. If they turn on advanced search tools, this can threaten google.com
Social Plugins: “Like” button
Allows website managers to quickly embed ‘like’ feature on website, like other social features. This will aggregate on FB, and is a form of social bookmarks
As users go to websites (Like CNN) they can see which one of their real friends like which article.
Now your friends are the editors, threatening traditional editorial process. Threat to social bookmarking tools like Delicious
All this social aggregated content will yield a powerful database of what you and your friends like, the precursor to customized web experiences and social advertising.
Social Plugins: “Social Bar”
A floating bar at the bottom of a webpage embedded by simple code allows for EVERY page to be quickly social.
Everywhere you go online your friends can be with you, forever connected
Google Side Wiki,Meebo, and Liveworld’s Livebar (unless they both integrate Facebook FB API). Disclosure: Liveworld is a client
Now as every page can be social, there is no reason for consumers to make buying mistakes –their friends opinions are always there, diminishing power of marketers.
A partnership with Microsoft that allows Microsoft office docs to now be social with your Facebook friend
This can extend collaboration with your friends to the office environment
Unsure if this use case makes sense, are your friends those you want to collaborate with? This is a direct threat to Google Docs
Facebook and Microsoft are in bed, to team up against Google. Expect advertising based on social context to appear soon.
“Presence” Location based data
Facebook handed out in every attendees page an RFID tag that allows you to swipe it at kiosks to indicate your locations, see mine.
Although experimental expect this to extend to location base applications, eventually tying into credit cards, and mobile devices
Location based social networks like Yelp, Gowalla, MyTown, Foursquare and Twitter already allow people to do this –the difference? Add these chips to physical objects
Expect this technology to extend to mobile phones, credit cards, and future consumer products –allowing for unique social interactions.
War Horn Sounded For Developers To Spread Facebook Experience:
A Precursor to Social CRM. All of the social data that is now being aggregated to Facebook is the foundation for Social CRM. As Facebook captures each ’object’ whether it be a song, restaurant, person, or ‘like’ they are now assigning a Facebook ID (primary key). This unique identifier will allow every person, object, and piece of media to be trackable and have associated metadata. In the future, expect these objects to be used by developers to quickly assemble experience in context, right on the fly.
Corporate websites can now be social –yet beware the tradeoffs. Corporate websites are plagued with inflexible archaic content management systems. Rather than wait for IT to develop a social roadmap for the corporate website, brands can now embed Facebook social features on corporate sites, serving up interaction and allowing users to find content their friends also like. Yet beware, by allowing Facebook to be the primary login, this reduces the traditional way of capturing leads and populating your database. Secondly, by doing this once, you’re setting the promise that Facebook will always be part of our corporate experience.
Facebook goes more public, and threatens Google –but users may revolt. Facebook’s roaring growth is a threat to Google and other web portals, and as more developers deploy these hooks, they spread their colonies all over the internet. Yet Facebook’s core conundrum is they’ve made the promise to their users to keep the experience private and closed. Expect continued scrutiny over privacy as Facebook struggles to go open to compete with Google, dragging along users to be more public every step of the way. Facebook’s battles are both external as well as internal.
Web Strategy Summary
Facebook to now offer Paypal as an additional way to buy advertisements and virtual currency for social games (press release). This paves a way for Facebook to reach global advertisers who prefer PayPal vs traditional credit cards. Although this partnership is limited in parameters to those two specific use cases of ads and virtual currency, this is yet another testing ground for developing Facebook into an eCommerce platform with over 400 million global users.
Update: Facebook contacted me after this post went up, and made it clear, this is announcement is not intended towards eCommerce, and is really just limited to the two use cases. While I understand and agree with the scope of today’s announcement, as brands interject more money into Facebook via advertisements, and on the flip side, users are more comfortable purchasing goods (albeit virtual) this continues to be an opportunity for brands and their members to get comfortable with monetary exchanges. As such, I’ve removed from the title of this post “Testing ground for eCommerce”, although the rest of the post stands.
Background Facebook has been testing the ability for users to purchase virtual Facebook credits for over a year, allowing users to send virtual goods to each other, as well as purchase additional features in third party social games. Over a dozen of these third party games already exist extending created by playfish, Zynga, CrowdStar, and others.
Increased revenues for Facebook –and PayPal. For Facebook, and their new partner PayPal, this deal makes sense, as they can continue to grow scalable, low-touch revenues streams by cultivating international advertising dollars, where there is clear global growth. This spurs international brands to continue to deploy Facebook ads, likely in the SMB space as international companies that are enterprise class would delegate ad buying to their digital agency. Although Facebook touts their advertising program, no official case studies or data has been released by them or third party researchers to my knowledge.
Additional channels to monetize heavy game players. For the game heavy , perhaps the 43 year old middle age women with disposable incomes, this gives them new opportunities to play games with increased functionality.
More use cases for game creators to test virtual goods, with brand sponsors. Game creators should allow for virtual items to be introduced into their games, and be sure to have a business development opportunity for large brands to participate –and offer branded virtual items in context of a social game.
The big opportunity? Testing ground for ecommerce within Facebook.
Facebook should roll this out to the application developer community to allow ecommerce functionality to the platform, starting with an application from eBay, the owner of PayPal. Brands should carefully watch how these early test by Facebook occur –and expect by end of year that Facebook will start to experiment with allowing ecommerce happen directly on Facebook Fan Pages. This is, of course, extremely exciting –but could be very terrifying to normal users.
Bold Strategy Bolsters Users, Developers, and Brands In a recent meeting at Facebook HQ, I was pleasantly surprised to find that Facebook is opening its doors to share roadmaps, data, and it’s experience. This strategy shifts attention towards Facebook.com as a sole destination, and towards a distributed network to the open web. Looking deeper, these impacts should shape your corporate web strategy as you re-allocate resources for application development, prepare for Social CRM, and prepare your corporate webpages to become “Facebook Fan Page” enabled.
To Combat Google’s Stealth Social Network, Facebook Goes Open
Facebook’s recent moves to In an open discussion, they revealed that they’re attempting to take great strides in the spirit of openness –yet beyond the ‘feel good’ move, this prepares Facebook for a more distributed approach, that will help them further colonize the open web. With the growth of the Facebook population blooming to 300 million, they’ve already demonstrated critical mass. Yet Facebook’s biggest threat isn’t other social networks like MySpace, or Bebo, their biggest threat is Google’s stealth social network, which seeks to envelope Facebook like an octopus. In order to countermove Google’s zen-like play, they’re taking a similar open approach, here’s what you should know:
How Facebook’s Open Strategy Shifts The Roadmap for Corporate Marketing
Although they announced several improvements (like a cleaner UI), let’s focus on three strategic initiatives and what they mean to brands:
Revealing Roadmap Strengthens All Relationships
From allowing non-students to join the community, launching the newsfeed to the ill-fated Beacon, Facebook’s spirit of innovation has often gotten ahead of its users. In a response to help both users and developers better understand Facebook’s future vision, they have now shared their 6 month roadmap in public for all to see. This helps developers properly allocate resources and prepare product timelines, as well as give users and brands forewarning for upcoming changes. This move not only helps with planning, but signals a relationship of trust, and indicates this is more about ‘us’ than just Facebook.
Sharing of Email Addresses Fuels Social CRM Facebook plans to allow users to share their email address with developers and brands at the control of the consumer. Currently, corporate marketing and support systems are unable to easily identify which customers are talking about brands in the public web –there is no unique identifier. Because email is a unique, universal identifier, (a primary key) brands who are investing in social CRM can better identify users. The promise to identify prospects vs customers, provide faster and customized support customers, or even provide contextual information will be at hand.
Fan Pages Everywhere Connects Corporate Sites and Social Networks Facebook will soon allow website owners to allow any of their webpages to now embed Facebook Fan features. This “Open Graph API” allows any product page could have Fan features that allow users to subscribe by becoming fans, and receive information on their Facebook newsfeeds that could be seen by their friends. This competitive move to Google’s SideWiki, extends the Facebook experience beyond the social network to corporate websites –making every webpage social.
Recommendations: Update your 2010 Planning:
Web strategists who have an active customer base in Facebook, should shift resources and planning for 2010 based on Facebook’s roadmap, in order to align with these significant changes, they should:
Evolve Your Web Strategy Roadmap Brands and developers should analyze the changes coming to the Facebook platform, and start to allocate resources. Although the roadmap provides general dates (month or quarter) around feature releases, developers should engage in dialog within the developer community or with Facebook themselves. In particular, the sharing of email addresses is planned for Nov 2009, and owners of the your Social CRM program should start planning immediately. Secondly, with the Facebook Fan page features coming in early 2010, web strategists should identify appropriate products to test, begin iterative design, and ensure legacy CMS systems are able to include these client side scripts.
Integrate Social Marketing with Existing Email Marketing If you’ve earned the trust of your customers, and they’ve shared their email address with your brand, you can now match their address with your existing customer databases and fuel your Social CRM initiatives. Secondly, if customers have opt-in you can now provide useful emails to your customers, or adding additional rows in your existing email marketing programs. Above all, be sure that you’re transparent with customers how you plan to use their email addressees, and always make it opt-in.
Boost Your Social CRM Strategy With Customer Data. Social CRM is a company’s response to the fleeting customer who self-supports each other in public social networks. In order to provide your customer with a holistic experience, you’ll need to map customer profiles in existing CRM databases to those in the public web. Start a discussion immediately with your CRM team to prepare for this influx of data, while initially the data will be just emails, the information in their profile could help to build a richer customer model that aids marketing, development, and support.
Prepare Steady Cadence of Community Focused Content. Now that every webpage can become a Facebook Fan page, your raving customers will want to get more information about your products –and tell their friends. You’ll need to create, and fulfill, an editorial agenda that fuels this ongoing dialog. Forget about advertising as we know it, instead create an editorial agenda encourages dialog such as contests, incentives that can be shared with their friends.
Facebook continues to make a series of evolutionary moves in recent months, rather than react to the news, let’s take a holistic look at where the company is headed. I’ve given my perspective to SFGate, now but want to dive into details here. I’ll give my perspective, but as we’ve seen time and time before, the real value is the collective contributions in the comments.
Evolving to a platform –not just a social network
Facebook isn’t a social network, it’s really a communications platform –in fact, when you look closely, it’s not unlike an operating system on the web. Early innovations such as the instant messaging tool,then the applications platform that allowed 3rd party developers (called F8, correction: Just Facebook Platform) aren’t unlike what Microsoft offers to consumers. What separates them from others is the social news feed which aggregates what others in your network are doing.
Unique culture fosters innovation
It’s important to examine the culture and leadership of a company as it’s a strong indicator of how they’ll behave. Young, innovative, yet somewhat reserved leader Mark Zuckerberg continues to make choices that don’t always include what the community expects –or wants. In my visits to their previous HQ, it was much like a dorm room: spray painted walls, fancy cafeteria. However recently, they moved out of downtown Palo Alto (to the determent of local businesses) to a centralized location on California avenue in biotech row off Page Mill. The employee base, and culture reflect all of this: the age of the untainted product teams indicate this –In my ripe old age of mid 30s, I’m clearly one of the oldest during my visits.
Recent moves indicate move towards real time.
Fast forward to summer 2009, and we’re starting to see some radical developments. First with the acquisition of Friendfeed which is mainly a talent acquisition and early snatching of potentially the next Twitter competitor, who they were unable to acquire. Now we’re seeing indicators that they’re gearing up for mobile, and other devices like gaming consoles with a Facebook lite version that is quickly delivers the basic for those that need to quickly find out what their community is doing and communicate back. Lately, we’ve seen indicators they want to find ways to improve real-time search, which means they can help consumers make real time decisions.
Awkward adolescence has its challenges
The continued innovation is spurred by the elusive business model –this awkwardness is a natural outcome of a company in growth. I’ve heard a couple of times from various employees that they’re generating revenue (but there’s no official information available) yet I hear from brands that traditional advertising is ineffective. Secondly, this constant innovation becomes a real burden on brands who have a difficult time understanding which tools to use and why, as well as 3rd party developers who are constantly rejiggering the changing API and Terms of Service.
What to Expect in Facebook’s Future: A Web Based Operating System So what’s in store for Facebook in the future? Here’s what we should expect:
Aggregator of all. To win, Facebook wants it’s network to spread to other locations, then aggregate back to it’s website. This centralizes Facebook (which can be accessed anywhere from any digital medium) as the hub of communications. As a result, consumers will make decisions based on information from peers in this hubs, and brands will pay money to be part of it.
A new class of competitors –beyond social networks. In the end, Facebook is an aggregator of all information that’s important to an individual and their friends. Who currently does this? Media darling Twitter does this, Friendfeed (hence the acquisition) and existing web email systems like Hotmail, Gmail, AOL, and Yahoo have shown indicators they’re thinking about heading this way.
Content to be more public –yet members may resist. The option to allow profiles to be public and the vanity URL landgrab are indicators that they want to make information more public –yet the challenge will be convincing members to opt-in.
Facebook.com as a destination isn’t as important. To be successful, Facebook will need to spread to many websites (like corporate ones) and experiences, this is why Facebook Connect (authentication for 3rd parties) matters. This Era of Social Colonization empowers the FB experience to spread to other websites.
Monetization engines to turn on. The constant innovation of dozens of products are akin to ‘throwing pasta at the wall’ to see what sticks. Facebook’s 250mm user base is nearing mainstream web portal (see traffic compared to Google and Yahoo) they’re quickly closing the gap.
No kingdom lasts forever. We see this time and time again, technology companies supernova, grow then fail to innovate from political tape and sheer size.
This is my take, yet it doesn’t necessarily mean it’s the only opinion. I hope to hear what you think holds in store for Facebook in the coming years, love to hear your comments.
Invest 20 minutes to listen to this podcast focused on how Facebook Connect helps brands connect with existing communities. This podcast, hosted by Aaron Strout of Powered, was joined by the digital editor of AdWeek, Brian Morrissey and marketing blogger/consultant, Susan Getgood, and myself.