Make Money Online

So they’ve finally gone all in: Facebook has launched Places, they’re internal location-based-service (LBS) marketplace, and when the third largest (yet poorest) country in the world does something new, the world watches.

For the moment, Facebook Places is only in the US, and still doesn’t have a writing API, but that will all change quickly. As that changes, it will have some serious implications for the Internet. Here are 3 ways in which Facebook Places is going to change the digital landscape:

1. The web just got a bit more closed

Earlier this week, Chris Anderson and Michael Wolff of Wired proclaimed that the web is dead. Their reasoning was that as we use apps more and more to consume content and interact with others, the internet becomes “less about the searching and more about the getting“.

Well, with Facebook Places, your run-of-the-mill Facebook app will start doing what you once needed a Foursquare, Gowalla, and Yelp app to do. This means Facebook has secured much more of a stake in how the net’s evolving.

More importantly, though, it means Facebook users have that much less of a reason to go beyond the walls of Facebook. And that is precisely the behavior Google should be worried about.

2. LBS is going mainstream

The advent of Facebook Places may be the big push we need to take LBS mainstream. And the way LBS will reach that level of adoption is through its Facebook smartphone apps.

Social media apps and consumer engagement with them is the reason that smartphones will push LBS mainstream. Those little apps are gold and consumers are infatuated with them. Such apps will let the marketing industry take LBS advertising beyond mere SMS spam.

Now, sites such as Foursquare and Gowalla already offer apps and user-experiences that make LBS advertising possible, but they don’t quite yet have the user-base. As Michael Lazerow of AdAge points out:

Foursquare and Gowalla combined have just a few million users. Facebook has north of half a billion. When Facebook gets into a market, they bring everyone. Literally, everyone.

So while Foursquare and Gowalla have had potential LBS technology all along, they lacked the audience. Facebook, on the other hand, has had both the audience and the advertiser base all along. Now that they’re rolling out the technology, LBS advertising (via Facebook apps, of course) shouldn’t be too far behind.

3. Foursquare & Gowalla condemned to mediocrity

In a nutshell, Facebook Places won’t kill off these services completely. But it’ll hinder their growth potential and dash any acquisition hopes they might have had (that is, at least any hopes of Facebook acquiring them).

On one hand, many users will simply choose not to integrate their current LBS network (e.g. Foursquare) with their Facebook network. We’ve already seen this in how many users use Twitter very differently than they do their Facebook status updates. So these pre-existing LBS networks will probably retain an entrenched user base.

On the other hand, these incumbent LBS networks will probably have trouble growing their existing user base. Given Facebook’s scale and reach, for example, many users will discover Facebook Places before they discover Foursquare or Gowalla. These users, then, will probably be less likely to see the value in joining a separate LBS-only network.

You see, just like Twitter, Foursquare and Gowalla are more of individual features than stand alone social networks. This much is evident in how Facebook Places is usurping their entirely functionality as a mere feature.

So these networks will continue to be relevant, but only marginally so and for what will be a stagnant if loyal user base.

Taming the wild wild web

The Internet is in its 20s. It’s starting to grow up and past the awkward, experimental years of its teens. It’s time for the Internet to get down to business.  Companies can no longer launch just to say they did so, but they will launch to have an answer to their investors’ questions of, “How will you make money?”.  Part of that maturity will lead to an increased competition between close competitors and there will be attrition.

So while Google and Apple try to fence us in at the OS level, Facebook seems to be moving to middle-man them (and might be working on their own OS). After all, if users only use your OS to run someone else’s apps, who really controls those users? Facebook clearly intends to address that weakness.

Read more here:
3 Ways Facebook Local Will Change the Internet

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So they’ve finally gone all in: Facebook has launched Places, their internal location-based-service (LBS) marketplace, and when the third largest (yet poorest) country in the world does something new, the world watches.

For the moment, Facebook Places is only in the US, and still doesn’t have a writing API, but that will all change quickly. As that changes, it will have some serious implications for the Internet. Here are 3 ways in which Facebook Places is going to change the digital landscape:

1. The web just got a bit more closed

Earlier this week, Chris Anderson and Michael Wolff of Wired proclaimed that the web is dead. Their reasoning was that as we use apps more and more to consume content and interact with others, the internet becomes “less about the searching and more about the getting“.

Well, with Facebook Places, your run-of-the-mill Facebook app will start doing what you once needed a Foursquare, Gowalla, and Yelp app to do. This means Facebook has secured much more of a stake in how the net’s evolving.

More importantly, though, it means Facebook users have that much less of a reason to go beyond the walls of Facebook. And that is precisely the behavior Google should be worried about.

2. LBS is going mainstream

The advent of Facebook Places may be the big push we need to take LBS mainstream. And the way LBS will reach that level of adoption is through its Facebook smartphone apps.

Social media apps and consumer engagement with them is the reason that smartphones will push LBS mainstream. Those little apps are gold and consumers are infatuated with them. Such apps will let the marketing industry take LBS advertising beyond mere SMS spam.

Now, sites such as Foursquare and Gowalla already offer apps and user-experiences that make LBS advertising possible, but they don’t quite yet have the user-base. As Michael Lazerow of AdAge points out:

Foursquare and Gowalla combined have just a few million users. Facebook has north of half a billion. When Facebook gets into a market, they bring everyone. Literally, everyone.

So while Foursquare and Gowalla have had potential LBS technology all along, they lacked the audience. Facebook, on the other hand, has had both the audience and the advertiser base all along. Now that they’re rolling out the technology, LBS advertising (via Facebook apps, of course) shouldn’t be too far behind.

3. Foursquare & Gowalla condemned to mediocrity

In a nutshell, Facebook Places won’t kill off these services completely. But it’ll hinder their growth potential and dash any acquisition hopes they might have had (that is, at least any hopes of Facebook acquiring them).

On one hand, many users will simply choose not to integrate their current LBS network (e.g. Foursquare) with their Facebook network. We’ve already seen this in how many users use Twitter very differently than they do their Facebook status updates. So these pre-existing LBS networks will probably retain an entrenched user base.

On the other hand, these incumbent LBS networks will probably have trouble growing their existing user base. Given Facebook’s scale and reach, for example, many users will discover Facebook Places before they discover Foursquare or Gowalla. These users, then, will probably be less likely to see the value in joining a separate LBS-only network.

You see, just like Twitter, Foursquare and Gowalla are more of individual features than stand alone social networks. This much is evident in how Facebook Places is usurping their entirely functionality as a mere feature.

So these networks will continue to be relevant, but only marginally so and for what will be a stagnant if loyal user base.

Taming the wild wild web

The Internet is in its 20s. It’s starting to grow up and past the awkward, experimental years of its teens. It’s time for the Internet to get down to business.  Companies can no longer launch just to say they did so, but they will launch to have an answer to their investors’ questions of, “How will you make money?”.  Part of that maturity will lead to an increased competition between close competitors and there will be attrition.

So while Google and Apple try to fence us in at the OS level, Facebook seems to be moving to middle-man them (and might be working on their own OS). After all, if users only use your OS to run someone else’s apps, who really controls those users? Facebook clearly intends to address that weakness.

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3 Ways Facebook Places Will Change the Internet

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Jambool, creator of Social Gold and former provider of virtual currency for Facebook games and web apps, was sold to Google for a reported $70 million. This follows the trend of game and social app providers LabPixies and Slide we covered here.

In a post about the Slide acquisition, I discussed how Facebook, which originally welcomed developers in 2007 with open arms by dangling the possibility of riches, changed the game and pulled the power back in, away from developers. But why did developers originally flock there? In a blog post, Paul Allen called it the “true spirit of Wikinomics”, explaining:

“Mark Zuckerberg made three big announcements. 1) Applications can be deeply integrated with Facebook 2) Distribution of the applications will occur through the network, and 3) The business opportunity Facebook is providing will give 100% of advertising revenue (for third party applications) and 100% of transaction revenue to the application developers.”

That move had a huge impact. First Round Capital, a venture capital firm, describes this step: “By providing a clear roadmap – and business opportunity – for the widget makers, Facebook has just increased its virtual R&D budget by over $250 million dollars.” First Round correctly predicted that companies like Slide, RockYou, and other developers would enrich the user experience and likely enrich Facebook.

One such company, Jambool, took on the task of building a virtual currency business on Facebook, facilitating the buying and selling of virtual goods and services for application developers. This gained them some traction with other app developers and helped to build a growing business.

But that was the past, and now, as Facebook has grown in size and influence, it has changed the rules. Just as Slide, RockYou, and others have seen their fortunes wane as Facebook grew more powerful Jambool literally had  the rug pulled out from under them once Facebook introduced credits and negotiated deals where these credits would be the exclusive virtual currency on the site. It’s no mystery then that Jambool was snapped up by Google.  Like Slide before them, Jambool’s market valuation and market viability took a hit when Facebook changed the game, making them more likely to embrace an acquisition by Google.

This expands the Google fold to include game makers, experts in viral widgets, social advertising, expression tools, and now virtual currency. What’s next? Who else has been hurt by Facebook changing the game? What gaps need to be filled in Google’s social strategy?

While there are many utility apps and games that fit the bill, the one missing piece are offers – the trend where users don’t pay directly for points, credits, or virtual goods directly, but instead they do tasks, trial products, or spend money on other things that get them what they want.

The two most obvious candidates in this space are OfferPal, which was flying high until the scamville problem we covered here and the choice by Facebook to use TrialPay and PeanutLabs for their offers. This dramatically cut OfferPal’s profile and instantly cast doubt on how big they could become, and now, with a reduced valuation but solid technology implementation, Google could pick them up and round out their portfolio. However, while OfferPal is one obvious choice, Google could also choose TrialPay – a successful, and less controversial, but smaller provider in the offer space. If Google was willing to be aggressive, they could buy TrialPay, which is the favored integration partner for Facebook and currently the main provider of offers that yield Facebook credits. Such a move, at the right time, could not only give Google a solid technology and team, but also temporarily disrupt Facebook’s ability to leverage offers for credits.

Google is building an army of technology,  social tools, and people to challenge Facebook’s dominance in social media. While it has successfully executed on many technologies, it’s only now buying the companies with the traction, experience, and the mindset to put the social back in Google. The only remaining questions are around their ability to they integrate the recently acquired companies and if/how they will move into the offers market.

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With over half a billion users, if Facebook was a country, it would be the 3rd largest country in the world. But it would also be, by far, the poorest. New revenue projections for 2010 would place Facebook’s GDP per capita in 2010 at just over $2, less than 1.3 percent of the world’s lowest GDP.

Of course, Facebook is not a country, it’s a business — it produces revenue, not GDP. And its revenues are expected to more than double in 2010. But even at that rate (and partly because of it), the numbers still leave some room to doubt  the company’s business model and future.

Average Facebook User Worth Less Than $3

Between the company’s ad revenue and virtual currency trade, Facebook is expected to more than double its revenue in 2010. As AdAge reports:

A new estimate from eMarketer says the company will book $1.285 billion in global advertising alone this year, almost double the estimated $665 million the company took in last year. That figure doesn’t include Facebook’s so-called virtual currency trade, which would nonetheless account for a fraction of the company’s overall business.

With more than 500 million active users, this places the average value of a Facebook user around $2.57. Not surprisingly, however, the average US user is worth a lot more.

As TechCrunch reports, “ US ad spending on Facebook is estimated to be $835 million this year, up from $500 million in 2009.” With the US accounting for about 30% of active Facebook users, that puts that average worth of an American Facebook user around $55.

Even though the average US Facebook user is worth about 22 time more than the average, that still places the value of Facebook’s “richest citizens” at about only one-third of world’s poorest – Burundi (see link above).

Bad Math

Of course, any economist of mathematician would scoff at my calculations. First, calculating GDP per capita is a bit more complicated than this.

Secondly, not all US ad spend is being driven by US users. For example, just as many US advertisers target users abroad, many non-US advertisers are targeting US users.

Nonetheless, the analogy, while purposefully absurd, does bring to light some interesting challenges still faced by the social networking giant.

Facebook Revenue & User Value in Context

There are three important ways we should look at these number before jumping to any conclusions.

First, revenue is not profit. Facebook is a private company, and we have no idea what its overhead is. Essentially, we don’t know how much of that projected $1.285 billion will be tied up in salaries, infrastructure, and debt.

Second, the rate of growth itself is not sustainable. Many savvy investors would be wary of such growth trends. After all, growth rates can’t continue forever at this rate. So some hard questions loom:

• When growth slows, how much will it be stunted?
• And when it does slow, will it be enough to cover overhead, such as salaries, maintenance, and debts?
• Is the indicator used my eMarketer, about the amount of money advertisers are spending on Facebook, one of good marketing strategy or lemming-like mentality?

Finally, what is a profitable user value for Facebook? Many affiliate programs will pay more than $2.50 for a lead or new user. So we have to wonder at what point does Facebook break into the black with their average user value.

Meaningless Speculation

As with all things digital, all this speculation is worth bupkis. Just as Facebook could find some way to revolutionize ecommerce, it can also end up being the next MySpace.

For now, there are only two things of which we can be sure: (1) with advertisers spending that much on Facebook, it’s an advertising opportunity we can’t afford not to at least  explore; and (2) given how ads are targeted through Facebook, the social network will most certainly change advertiser expectations across the board.

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Facebook Is The Poorest Country In The World

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This is another virtually pointless post, yes. I’ve promised posts and more frequent posting and just haven’t lived up to it.

I’m just making this post to say: I still have plans on blogging more in the future. I’ve learned A LOT of information that I can definitely share. Right now I’m just too busy to really think about anything else but my main projects. A project 5 months into the making is going to launch in the near future (for real this time) so it’s like cramming for finals week in my head right now.

Once things cool down I’ll be able to relax and get to blogging more. Priorities folks…gotta win the bread.

This post will be totally useless without some usable piece of affiliate marketing information so here it goes: something I’ve been experimenting with in a few small affiliate side projects is collecting email address information and THEN shooting them to the affiliate offer (”You’re getting a free [blah blah], just enter your name and e-mail address to continue!”). It seems there are quite a few people out there doing this. E-mail them with some “Welcome” packet of affiliate offers, sub them to your list and just mail out more affiliate offers. Plus make commissions off whatever offer you send them to after you capture the name/email. There’s almost always higher payouts for email only offers too. Something to think about and test.

Sorry for being lame.

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Foursquare came roaring out of the box less than six months ago and has, by all accounts, become the leader in location-based services. But that isn’t stopping Gowalla from aggressively going after its rival.

According to CNET, Gowalla has just launched some new features Foursquare doesn’t have, plus a couple of high profile promotions that are designed to boost its credibility and usage.

One Gowalla promotion is a collaboration with Nike and Lance Armstrong’s cancer-fighting Livestrong foundation that ties in with the Tour de France. Messages of inspiration submitted by the public are reviewed, and some are selected for a kind of instant printing along the cyclists’ route using a robotic “chalkbot” machine. Gowalla’s role in all this is that the chalkbot will check in with its location on Gowalla, and it will post photos of the painted messages as well. Users of Gowalla can also check into Nike retail locations and receive a Tour de France virtual “pin.”

A second Gowalla promotion is tied in with the tenth anniversary of crowdsourcing t-shirt site Threadless.com. The “Threadless Everywhere Tour” is making its way across the country this summer in a converted Airstream trailer. The trailer will be a mobile Gowalla spot, employing a GPS to update its location automatically. A Gowalla user who checks in on the Airstream could receive a free limited edition t-shirt.

These promotions notwithstanding, Foursquare seems to have a big jump on its competitor. Foursquare has gained traction with big advertisers and even publishers.

Foursquare also has a lot more users and is apparently growing faster than Gowalla. Analytics firm RJMetrics monitored Foursquare and Gowalla APIs for the past four weeks, and the results indicate that Foursquare has over 1.9 million users to Gowalla’s 340,000 or so. Foursquare’s daily percentage growth rate is 75 percent higher than Gowalla’s, according to the analysis. Foursquare has approximately 5.6 million venues to Gowalla’s 1.4 million venues.

As might be expected, other competitors are popping up in this space, and some of them could be players. Brightkite, for example, was compared with Foursquare and Gowalla in the “Check-in Services Bug Battle” conducted by more than 300 uTesters from nearly 40 countries. Kevin Tofel analyzed the results for GigaOM. He found that while Foursquare was tops in Ease-of-Use and Social Media Integration, Brightkite came in second over Gowalla in both those categories. Gowalla, however, bested Foursquare and Brightkite in Location Accuracy. Tofel points out that there are other competitors to consider, including Geodelic, MyTown, and Where.com.

Location-based services are really poised for growth. In mid-June, Twitter announced Twitter Places for geo-tagging and said the new feature would soon link to Foursquare and Gowalla. The just-introduced Yelp 2.0 has location check-in services. Google Buzz has location capabilities. Facebook isn’t sitting on the geolocation sidelines, either.

Location-based services and advertising is a hot new field. It would be wise to keep an eye on Gowalla and Foursquare to see what innovations and changes they bring in the next few months.

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Pick Your Corner: The Battle Over Check-Ins Has Just Begun

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So Facebook did it. They became “the next MySpace,” and by proxy, the MySpace Killer. But what if being the next MySpace also meant going the way of MySpace?

Well, some new data suggest that two might go hand in hand. A recent study shows that teens might be losing interest in the social network.

So what can be the cause of all this? Well, it’s really anyone guess, but if I was placing bets, I’d put my money on the fact that Facebook is more of a set of features than an online destination.

An Aging User Base

Last month, ROI released a study that suggested many younger Facebook users are suffering from Facebook Fatigue. As the Social Times reported:

Social networks in general take up a large portion of teens’ time online – over 80% of it according to this survey. The Facebook burnout isn’t affecting all of these youthful social networkers: 90% of teens say they use social networks and prefer Facebook above all others. However, nearly a fifth of these (19%) say they use the site less often, or have stopped altogether in recent weeks. Also, 21% of those surveyed say that their friends are using Facebook less often than before.

Now, in social media, it’s also important to remember that the children are the future. So when the young give up on you, it might be cause for concern.

• First, an aging user-base is a user-base that gets closer to death everyday. And when your user-base starts dying, so do you.
• More importantly, (and immediately), when young users give up on you, it suggests that there’s something newer and better out there, and that that something is coming for your market share.

But this study doesn’t indicate where these teens might be going. After all, this trend may very well be seasonal (i.e. teens on summer vacation spending more time outdoors).

So should Facebook still be worried? Well, maybe and maybe not. It all depends on how these users are interacting with their personal network.

Features, Functions, and Friends Oh My…

The thing about Facebook is that it’s just a toolbox of bells and whistles that we use to interact with our personal networks. And the thing about toolboxes is that their contents (the tools) can be moved into another box at any moment.

Kids might be losing interest in Facebook as an online destination. But they’re surely not losing interest in (1) their social lives, (2) interactive media, and (3) using digital media to manage their social lives. So how are these young Facebook refugees “staying connected”?

Well, the obvious answer is their mobile phones. Specifically, it’s very possible that these youths are using Facebook Mobile to stay connected, and just don’t consider it the same thing as “being on Facebook.”

And as much as this might mean good news for Facebook, it could also spell disaster. For instance, how many of its features does Facebook actually own?

Currently, plenty of mobile devices come equipped with social networking apps that cross-reference your contact list with your social network profiles. This allows you to keep phone numbers, Twitter handles, and Facebook profiles all under one contact.

But there’s no reason why Facebook has to be a part of that equation. For example, future releases of Google’s Android could very well offer users Facebook-like functionality in a closed network environment — i.e. allowing you to share “status updates” and other UGC directly with your phone contacts.

Such mobile OS features could pose a serious challenge to Facebook. Not only would they represent an alternative, but they’d also skirt many of the privacy issues/controversy that Facebook has been struggling with. So it’s no wonder that Facebook might be working on a mobile OS.

The Pitfalls of Success

Becoming the next MySpace, Facebook, or Twitter is a bit like making a deal with devil. You’ll rise to glory, but before you reach to top, new technology can outpace you and render you obsolete.

If a mass Facebook-exodus happened tomorrow, all that would be left was a mountain of user data that would depreciate drastically in value with every passing day. This would be particularly troubling for the social network because that data would’ve never had a chance to mature — investors would be sitting on a mountain of junk bonds.

Of course, a handful of teenagers giving up on Facebook is hardly a death knell. And it’s not as though they’re turning to some newer, sexier, more financially viable alternative.

Facebook still probably has plenty of breathing room, and they may very well be working on the next steps in both their revenue model and user experience. For their sake, let’s just hope that Mark Zuckerberg didn’t set out to be “the next MySpace,” and if he did, let’s hope that he doesn’t get his wish.

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Watch Out Facebook Or You May End Up Being the Next MySpace

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The last time that Facebook tried to seize control of the internet, it was by using Facebook Connect to pull everyone else’s content within its walls. Well, it seems that Facebook might be opening up another front in its fight for world (wide web) domination, and this time, Google might actually be worried.

Facebook seems looking to break out of its web-based cage and enter into personal devices by developing its own operating system. TechCrunch recently reported that Facebook has poached some new hires (including 2 Googlers) with extensive experience in OS development, including:

• Matthew Papakipos, Google’s Director of Engineering who started and led Google’s Chrome OS project
• Jocelyn Goldfein, a former VP at VMware and the General Manager of their desktop business unit
• Eric Tseng, previously Google’s senior Android Developer

Googler Implications

Consequently, it’s no wonder rumors have surfaced that Google is (1) scared, and (2) working on a Facebook competitor called Google Me.

After all, there are two main implications, here, for Google. First, given Facebook’s user base, the potential for a Facebook OS to attain critical mass is considerable.

More importantly, such an OS would mean that it wouldn’t matter where the content was because the user would always be within Facebook’s walled-garden.

Just imagine: an OS that did everything that Chrome or Android does, but also makes it easier to interact with your friends on your favorite social network.

It could give Facebook a considerable edge over Google. Technically, Facebook users’ Google sessions would all be inside the wall. Facebook could gather data on how every one of its OS users use Google — including what they search, what they click on, and what’s in their Gmail.

Of course, Facebook is not the next Google. They don’t even seem to be trying to be.

But given Google’s track record with social networking, maybe we should be asking: Can Google be the next Facebook?

UPDATE on Google Me: It looks like we might have glimpse of just how Google Me is supposed to work.  Search Engine Land reported yesterday that Google has added Google Buzz links to its social search. This means that content from any account tied to your Google Buzz will now show up when anyone in your social circle does a search:

How does Google determine my social network? [...] In short, Google examines:

• Google Reader: if you have a Google Reader account, any content such as blogs that you subscribe to are considered part of your circle
• Google Chat: anyone you’ve enabled to chat with is considered part of your social circle
• Google Contacts: Anyone you’ve classified as friends, family or coworkers is part of your circle
• Google Profile: Anyone’s content you’ve associated with yourself via your profile is examined to locate people to add to your circle

So it looks like rather than trying to pull everyone (and every thing) within its walls like Facebook, Google’s strategy might be to pull everyone’s personal social network out into the open.

See the rest here:
The Facebook Operating System

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The gargantuan numbers being generated by Facebook, Twitter, and YouTube are of paramount importance for marketers.  These numbers set the tone for why social media has already changed the manner in which major advertisers are now defining their media strategy. More and more companies are realizing the potential social media may have.

Famecount.com is a British website that reports on usage trends across Facebook, Twitter, and YouTube. Famecount uses data reported via the APIs of the three services and then categorizes that data to create rankings.

The leading Performer of the moment is Lady Gaga, with over 8,475,000 Facebook fans, over 4,500,000 Twitter followers, and over 303,000 YouTube subscribers. Those are awesome numbers, but she’s an entertainment phenomenon, after all. Let’s take a look at something a little less hip – commercial brands – to see which companies are making the grade in social media.

According to Famecount’s popularity index, which is an aggregate of all three of the leading social media, the top three brands in social media worldwide are (1) Starbucks, (2) Coca-Cola, and (3) Skittles. Starbucks has over 7,700,000 Facebook fans, over 920,000 Twitter followers, and more than 6,600 YouTube subscribers, to Coke’s 5,700,000 Facebook fans, 32,000 Twitter followers, and more than 9,500 YouTube subscribers. Starbucks comes in at 68.81 percent to Coca-Cola’s 52.54 percent on the Famecount index. Lady Gaga, by the way, is 100 percent on the index.

Starbucks and Coca-Cola leading the pack may be expected, but some of the ten most popular brands might surprise you. They include a remarkable range of industries: food (Oreos), drink (Red Bull), airlines (JetBlue Airways), technology (Dell), supermarkets (Whole Foods Market), and online retailers (Zappos.com and Woot.com).

Over my years in marketing, I’ve learned to take numbers with a grain of salt, so I don’t necessarily agree with the notion of a popularity index, which might skew the data and show a somewhat arbitrary ranking. For example, Whole Foods has just 264,000 Facebook fans, but because of its 1,770,000 Twitter followers, the company ranks as the number four brand according to the Famecount index.

But let’s put that aside and consider the implications of the raw numbers. Consider Starbucks’ 7,700,000 Facebook fans, for example. That number is more than the circulation of Better Homes and Gardens magazine, the third largest magazine in the United States. It’s about 10 percent of the worldwide viewers of CSI: Crime Scene Investigation, the world’s most watched television program in 2009.

For any company to generate interest from almost eight million people is, from a marketing perspective, nirvana.

That’s why you see Fortune 500 companies scrambling to gain a presence on Facebook and Twitter. That’s why you see Starbucks soliciting ideas from customers, and why you see companies like Pepsi and Coca-Cola trying to outdo each other in the social media arena.  That’s why you see companies like Visa using YouTube instead of television advertising during the World Cup.

For marketers, it is all about numbers. And when marketers look at social media, they see the kind of huge numbers that make them want to shift their promotional dollars from traditional media to social media.

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So Facebook is no stranger to privacy criticism. But between trying to become the default social web and Mark Zuckerberg declaring the end of privacy, the social network is coming under more fire than ever. In fact, accusing Facebook of being drunk on dreams of world domination, Wired’s own Ryan Singel recently put out a call for an open alternative.

But the pitiful reality is that Facebook isn’t evil (well, at least not categorically). They’re behaving just as “responsibly” as we’d expect any private enterprise to: they’re trying their darndest to establish a monopoly in their marketplace.

It just so happens that they’re in the business of trading/selling our data. But there’s nothing forcing us to give it to them, so we should stop sniveling about consequences of our own reckless whims and accept that there’s no such thing as a free lunch.

Freedoms, Privacy, and the Media

If you live in a Western liberal-democracy, then you enjoy a whole bunch of rights that are protected under the law. And chances are that those rights include some degree of privacy, and freedom of speech and freedom of expression, and so on. But even though they’re protected under the law, those rights and freedoms have their limits.

Take your privacy rights, for example. Once you leave the privacy of our own home, so many of them go out the window.

For instance, once you’re in a public space, a journalist can snaps photos and shoot stock footage of you without your permission because (1) you’re in a public space, and (2) they have freedoms of the press that allow them to document the world around them. Similarly, if you enter onto private property, such as a shopping mall, it is perfectly legal for you to be subject to CCTV or other surveillance systems.

So when you’re not in the privacy of your own home, your privacy rights are limited.

And take freedom of speech and freedom of expression. In a liberal-democracy, we all have the right to express ourselves. But that doesn’t entitle us to access to broadcast media.

We are all entitled to share our thoughts with our friends, family, and colleagues. But if we want to broadcast those thoughts in print or over the airways, we need to raise the financing ourselves – just like any other private media enterprise.

The point is that the rights and freedoms that we have as private individuals are limited to the privacy of our individuality. Once we leave the confines of our homes or try to exercise those rights on a wide scale basis, they are seriously limited.

No Free Lunch: Facebook & Privacy

Coming back to Facebook, there are three reasons why we shouldn’t expect complete and utter privacy protections: (1) the Facebook community is a privately owned space beyond the confines of our own home; (2) Facebook is a media platform that we are not entitled to under the law; and (3) Facebook is a service provided by a private enterprise that has to turn a profit.

First, Facebook does not belong to any of us. It belongs to shareholders. And those shareholders can dictate any terms of entry they like. In this case, accessing Facebook requires that we share personal data. If we don’t want to share that data, then we just have to forego using Facebook. That is all.

Second, social networks are just another wide scale media, like television or newspapers. Although they facilitate our freedoms of expression, speech, and assembly, they are not integral to them.

There are still plenty of other ways for us to interact with other people; they’re just not as convenient. So if Facebook wants to make relinquishing our privacy a condition of accessing their platform, they are entitled to do so.

Finally, Facebook’s is a profit driven enterprise whose revenue model is based on user date. The only reason they can offer their service free of charge is because they can aggregate their users’ data and use it to offer marketing services. If their default was privacy, their business model would collapse, and there’d be no more Facebook.

The Face of Privacy

In the article calling for a open alternative to Facebook, Ryan Singel pointed out how Facebook’s popularity has demonstrated that “We want easier ways to share photos, links and short updates with friends, family, co-workers and even, sometimes, the world.” The only problem is that we are not willing to pay for it.

Facebook is one of those services that hit critical mass because it is free to use. Had there ever been any cost barriers to registering with the site, it would’ve never taken off the way it had.

The catch is that there is no such thing as a free lunch. As with every free online service, we must expect that there are strings attached to our using them. So, just as we have certain privacy rights under the law, we must also waive those rights when we want to enjoy someone else’s private property.

That being said, it seems that if most Facebook users were given the choice, Facebook would have to be a bit more prudent with their personal data. Of course, the only way that Facebook users could be offered the choice would be through an alternative to Facebook.

The question that remains is twofold: (1) is user disenchantment sufficient to justify a viable competitor to Facebook? And (2) how could such a competitor foot the costs of development if they weren’t selling their users’ data?

The likely answer to both questions is “no.” Rather, what we can probably expect to see is Facebook to continuing to probe the privacy limits of its users until they strike that happy balance between lip-service privacy protection and record profits.

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Ever since Facebook announced its latest changes to Facebook Connect, speculation has ranged form Facebook becoming the next Google to the company seizing control of the internet. What happens 5 years from now is anyone’s guess; but one thing is certain, Facebook is not the next Google.

The two companies have very different business models, leaving plenty of room for the two leviathans to co-exist. Their respective advertising models offer marketers very distinct value propositions.  Google could easily leverage Facebook’s APIs to maintain its market lead.

The Value Proposition of Ad Targeting

While Google has proven itself as unparalleled advertising channel, (generating 90+ percent of its revenues from Adwords and underwriting all it’s other projects in the process), the recent changes to Facebook Connect seems to have considerably bolstered Facebook’s potential as a value-added marketing channel. Now, Facebook can not only “hyper-target” users with interactive ad experiences according to demographic data, but other companies can do so by accessing Facebook social graph. As one ex-Googler (writing for TechCrunch) put it:

Unlike Google Adwords, this model will not be constrained by the fact that you have to actually look for something. You don’t have to search for makeup, you simply have to log into Facebook, and be a young woman fashionista to discover Dior mascara. Dior can reach many more potential customers this way than by just advertising on Google Search.

What this analysis fails to acknowledge is that the value proposition of Google Adwords is that users are already looking for something. Google users are pre-qualified buyers already in the market for something. They want to buy.

Facebook users, on the other hand, may very well be “hyper-targeted” and fit perfectly into the target demographic. But they haven’t pre-qualified themselves. In fact according to Omniture traffic from social media is 20x less likely to purchase than average site visitor. From an advertiser’s point of view, then, Google offers a much lower risk ad investment than Facebook.

Facebook Connect(ing) to Google

Another reason why it seems unlikely for Facebook to completely displace Google is that there is nothing preventing Google from using Facebook Connect to access Facebook’s social graph. If Google did so, they could further bolster their ad-targeting abilities, and offer advertisers the best of both worlds.

Imagine if Google integrated Facebook Connect into their existing suite of products. If users were simultaneously logged into their Facebook accounts, Google could access their user data. Now, Google would be in a position to offer advertising according to user intent (i.e. searches) as well as social graph information – such as personal network, interests, and recent activity.

Given the number of Google users with Facebook account, the potential would be considerable. It would be an advertising opportunity that would be hard for marketers to exist. Not only could they enjoy both kinds of ad targeting, but they could consolidate more of their campaigns into one platform,  Google.

Reluctant Bedfellows?

As much user data as Facebook possesses, it lacks data about what lies beyond its own walls. After all, it’s a walled garden design to keep users in.

Indeed, Facebook Connect seems to be an effort to divert as much content and as many users as possible within those walls – and access to social graph data is a considerable incentive for third-party sites to do so.

But the project might be a bit too ambitious. At the rate that the social web is evolving, it seems unlikely that any social network will ever be able to corner as much of the web as Google has with search.

Furthermore, while Facebook is designed to keep users in, Google’s very modus operandi is to help users leave the site – to find out what else is out there beyond Google. And it is during that (search) process that Google is able to pre-qualify users for its advertisers.

So if Google were to leverage Facebook Connect, it could actually offer advertisers the best of both worlds. Advertisers would be able to target users according to intent, social graph data, or both. They would also be able to consolidate more of their campaigns under one roof.

Of course, this would mean that Google would be reliant on Facebook to some extent. They would have to rely on Facebook to maintain its active user-base and keep their data fresh and up to date.

But this would also mean that Facebook’s future would be secured. They would have become an invaluable source of user data for thousands of sites with millions of users and those sites would rely on Facebook for user data, just as they already rely on Google for traffic.

What’s important is that the two sites are not perfect competitors, and there’s no reason why one can only succeed at the expense of the other. In fact, both companies excel in their respected niches, and a strategic partnership between the two would likely be very profitable.

Source:
Facebook is Not the Next Google

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Lesser of Two Evils

Google made recent headlines when they announced that while cruising around different neighborhoods to collect photographs for Street View, they had inadvertently collected private information from various Wi-Fi networks that were unencrypted. Like their previous step into hot water with privacy advocates when they published a bit too much Buzz information, Google was quick to respond to questions raised by the data protection authority in Hamburg, Germany.

After finding that in their quest to provide better location based services they had actually captured, and stored, payload data from various WiFi networks. Payload data is the actual packets of information that is being sent across a network. Data like credit card numbers, online orders, emails, and just about anything else that travels across a wireless network.

As it turns out, back in 2007 a piece of code written for an experimental WiFi project was included in the software used by the Street View cars. So for three years, Google had been, assumingly, unknowingly collecting payload data from unsecured networks.

Response

So they weren’t so quick to realize their privacy gaffe. After all, it took them three years to realize that they were spying on people. In their defense, however, Google did immediately take steps to rectify the situation. Thus far they have:

• Requested a code review for the software in question to be completed by a third party
• Request that the same third party confirm that any data collected inadvertently is deleted
• Complete an internal review of their procedures to avoid similar problems in the future
• Stopped the Street View cars from collecting WiFi network data altogether

Basically what Google did can be equated to a nosy friend peeking at your bank statement that you left out on the dining room table in plain view. Sure the case can be made that you were stupid for leaving it out in plain view, but all the same, it’s your house (network) and your private stuff. Shame on your friend for poking around even if that was not their intention.

The Facebook Comparison

So I have been picking on Facebook recently. But as a result of all the pressure that the blogosphere and other negative press Facebook decided to discuss how users’ private information is handled by the company.

But there are distinct differences in what Facebook has done over the years and Google’s recent mistake. Google is in the awkward position of getting caught peeping. Although the case can be made that payload data can be used in location based advertising, Google has claimed that this is not what they were after. Although there have been past incidents, the public is often quick to forgive Google. They aren’t arrogant about their mistakes and their philanthropic work helps support their “Do no evil” claim. They give us an “Aw shucks” and we forgive.

Facebook, on the other hand, drops the privacy ball in an entirely different way. They are the neighbor who goes through your trash and finds out every bit of juicy gossip they can. With this information in hand they turn to fellow neighbors spreading their treasures around hoping for something in return. When confronted, they are full of excuses but next trash day there they are, rooting around for something even better.

Yet, whether we buy Google’s claims of innocence or we admonish Facebook’s arrogance, we will return to both because lack of privacy is what we have come to expect in this day and age.

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Is Facebook Or Google The Lesser Of Two Evils?

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Offers, and scams that often came with them, can mean serious revenue as we mentioned in the earlier article here. The concept is simple, the user wants something, we’ll call “Item A” but doesn’t want to pay for it or wants a discount, so a content provider gives them “Item A” for free or a rebate on “Item A” if the user completes an offer we’ll call “B”. The problem arises when the offer given for “B” tricks the user into giving up personal info, which is then sold, or commits the user to some other service, often costing more than “Item A”.

But the once the word spread that many offers were scamming users and costing them their identity or hard earned cash in ways they didn’t expect, social networks, gaming companies, and other sites were forced to clean up their act. The trick is that most of those companies were private, and were able to hide the revenue impact of making those changes. Luckily, there are some public examples that can shed light on the net impact, and one of them just released their numbers.

Classmates.com was one of the companies using these shady offer incentives, and it’s cost them a pretty penny. As stated in their quarterly earnings report, The classmates.com revenue decreased 14 percent versus the year-a-go quarter, in spite of a 9 percent net increase in paid accounts. Included in that impact, a 18 percent decrease in advertising revenue. Wow.

• Total Classmates Revenue per paid account (Q1 2009): $12.83
• Total Classmates Revenue per paid account (Q1 2010): $10.12
• Revenue decrease / paid account: 21.2 percent

The net impact on Classmates.com is close to the ballpark numbers about “offer” revenue thrown about the web for the private game and social network firms. The dip in revenues could also play a factor in if/when/how the game and social networks go public, as such a significant impact could give them some heartache on the investment bank roadshows before potential IPOs. Maybe it really was a good idea to take those extra investment dollars.

So it seems that scammy marketing techniques and offers indeed pay the bills and have contributed to the growth and longevity at Classmates.com and likely many others who used the scammy offers.

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Cancel Your Scammy Offers? Lose Revenue

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Janet Fouts, author of Social Media Success!, and Beth Kanter, author of The Networked Nonprofit, have recently collected a selection of ‘how to’ tweets related to social media and non-profits, and compiled them all in #SOCIAL MEDIA NONPROFIT tweet. I got a copy of the book yesterday, and it’s a quick read, as the authors’ intended, but chock full of inspiration.

A few of my favorites:

“Focus on sharing your cause. The money will follow.”

and

“Create a relationship first, and then ask for support.”

This is a great book for traveling, or if you’d like to see bite-size examples of successes in non-profit social media.  Either way, I’m recommending this one, especially if you’re involved with a non-profit.

Social Bookmarking

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Review of #SOCIAL MEDIA NONPROFIT Tweet

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Need to integrate social media with traditional marketing activities?  Get the job done by realizing and acting on 2 facts: traditional marketing concepts and constructs still create successful outcomes and the all web is a social media.  Follow me and I’ll show you how to optimize social media with traditional strategies in a way that creates quick results — more sales and leads.

Here’s what I’ll pitch you to get the job done:  put integration on the back-burner.  Replace it with a better objective.  I’ll give you compelling reasons why to do this; proof that not integrating social media is the way to go (for most of us) and finally I’ll illustrate with a case study.  I’ll provide living proof.  Beware though,  consultants and gurus may not care for what I’m dishing out.

Who’s integrating and why?

Integration is a logical concept.  If something is new it should be integrated with what already exists.  It’s a natural thing to do.  When a newborn child is brought into a family, it’s time to integrate.  Heh… and that can be a challenge for sure with existing siblings.  But does this reasoning make it right for your business?

As part of a book project and marketing leadership speaking, I’m researching the true trailblazers — many of whom keep quiet when it comes to how they create results using social media… and Web marketing in general.  The theme that keeps recurring is this:

They don’t integrate “new strategies” with old.  They take time-tested direct response marketing concepts (best practices) and apply them to new digital technologies that will likely produce a meaningful, measurable result — a goal within the context of their business.

Remarkably successful marketers are operating under the assumption that “social media” is not really new.  All of the Internet is a social media and it always has been. They’re not integrating in hopes of optimizing under some hocus pocus theory or logical assumption.  They’re making sales and/or generating leads today,  I’ll discuss how they’re doing it.

All media is “social media”

But first there’s a problem, Houston.  Let’s knock this out quickly.  Use of the term “social media” prevents clarity and clarity prevents action… and action prevents improvement.

Think about it.  We use all forms of media “socially.”  Consider how we use a newspaper clipping or a telephone.  Now think about email.  We share (re-distribute, forward), argue, discuss, lash out at, lament over, compliment, barter and agonize via these things… these media.

If we can agree that all media is social (especially if it’s digital — it’s hyper-social) then we can likely agree that “social media” is really a poor choice of words that needs to be — well, killed.  And for some very strategic reasons.  It prevents clarity and clarity prevents action… and action prevents improvement.  The continued use of the words “social media” is part of a current raging debate (see link above).

Robert Bacal, successful author and CEO of Bacal & Associates shares this bit of wisdom recently at Rob Key’s recent piece on the need to stop using the term ’social media.’

Social media has never been driven by function and purpose but by buzz and mass popularity (with a few exceptions). That’s because, in part, there are no new functions or purposes because social media is not a quantum leap. It’s barely a stagger forward. What separates it now from what has come before is that it got buzz, got cool, got popular.

It’s a “tool” looking for a function.

My point: Thinking that “social media” is something really techie, revolutionary  and cutting-edge-new makes us think and act like we’re clueless as marketers — when we’re clearly not.  A majority of us know good marketing. We’re just overly enthusiastic about social media.

And part of this enthusiasm is being fed by consultants and solution providers who fuel the fire of our very legitimate excitement.  We’re giddy, a little bit gullible and with good reason.  The result: sometimes we become tools of the tools themselves.  And I hate being called a tool.

But…

Marketing hasn’t changed.  Consumers haven’t changed — other than spending less. The rules governing our businesses have not changed. This economy is certainly spotlighting that fact.  What has?  Our environment.

There is no “digital revolution”… just an evolution.  Can we agree now that the “is social media a fad or is it a game-changer?” dust has settled?

Integrate later — make sales today

What?!  I thought this was about how to integrate “social” with the rest of mainstream marketing.  Well, yes… it is.  Bear with me.  Before we strive to integrate, traditional “old school” marketing is where we should be looking for answers for “what works” in social media marketing.

And isn’t that what we’re really after — optimum performance of all marketing programs?  But by making a bunch of things that aren’t (yet) optimized themselves work together harmoniously — is that really going to produce a better result?

The premise I’m operating under is that the “integration discussion”  is not a valid one, not yet.  First things first, let’s get better at optimizing results of what we’ve been given to work with — “traditional” web marketing strategies.

Put integration on the back-burner.  Replace it with a better objective.  Find ways to improve ROI of your current marketing tools (Web and traditional).  To…

Attract unqualified customers (who will eventually buy), keep them “engaged” with digital content “long enough” so you can “be there” when they’re ready to buy. Then pounce with a compelling call to action.

Wouldn’t that improve your job security?  Your net worth?  Your profit?

And in days ahead, we’ll explore how to do this.  Sound good?  Sound social?  Sounds productive to me… more so than working on “integrating” based on some consultant’s or vendor’s presumed outcomes.

E-mail is ’social media’

Email works.  It’s also a known entity.  But there’s a lot of discussion all over the web and at conferences about the interplay between email and “social media.” A lot of insisting that one affects the other and circumstantial proof offered up as reasoning behind, of course, the need to integrate these new “social doo-dads” with the old.  If we can do that we’ll unlock… we’ll open the floodgates to… well, you know.

I say stop the madness.  Email is social.  Treating it in any other way is laying obstacles where they’re not needed.

Experts have all kinds of analysis on why and how this “new thing” impacts the old tactics.  There’s an incessant need to pontificate often driven by vendors who sell solutions across both “new” and “old” — or who offer the ability to integrate them.  So the “experts” (vendors) invent some reasoning why that has something to do with ROI — as they define it.

But you’re too smart for this charade.  That’s why you read ReveNews!

So I’ll prove to you that the need to integrate is largely one that makes little sense — it’s not needed.  It’s based on “social media” being some kind of new “thing” out there — a thing that doesn’t really exist beyond technology that connects all of us more ubiquitously.

Along the way, I’ll show how email is an effective “social media.” It’s old school direct response marketing but it is a social device by nature.  You cannot “un-socialize” email.  It can often be super-charged when combined with emerging things like video, blogs, social networks, Twitter — “social media.”

Here’s what we’ll cover.    I’ll also throw in a few case studies — one from eastern Europe that will astound you and inspire you and make you proud to be an online marketer.   You’ll learn how to:

• Acquire new customers with “ethical bribes”
• Use content and a publishing model to net sales you’d otherwise not get – and make a profit
• Grow your e-mail prospect list organically using a simple sweepstakes promotion
• Generate incremental web sales (sales outside of what your catalog, broadcast ads, etc. generate demand for)
• Take what you already know works and apply it to make social media pay dividends.

See you next time and I look forward to your comments and feedback on what I’m sharing.

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