Make Money Online

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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The title of this post is the name of a classic book by Dr. Seuss, but it also refers to the introduction by Facebook of its newest service, Places.

Places is Facebook’s long-awaited entry into the location-based services marketplace. As I’ve discussed previously, this area is an outgrowth of the social networking/smartphone connection and it’s quickly becoming the next major growth sector. Facebook’s Places is an attempt to counter the momentum of such services as Foursquare and Gowalla, if not crush it altogether, as well as capitalize on user activity in local over the long term.

As with Foursquare and Gowalla, Places enables users to “check in” at places and tell their friends where they are. The difference, of course, is Places users can seamlessly alert their friends on Facebook. Attempting to distinguish Places from competitors, Michael Sharon, the Places product manager, tells The New York Times:

“This is not a service to broadcast your location at all times, but rather one to share where you are, who you are with, when you want to. It lets you find friends that are nearby and help you discover nearby places.”

Not surprisingly, Foursquare and Gowalla told The Times that they see Places “as a complement to their own services and as an opportunity to gain additional distribution.” Foursquare actually was present at Facebook’s headquarters for the news conference announcing Places – so at least for the present time, the two companies are playing nice.

Facebook’s move comes at a time when it is increasingly positioning itself against Google in what could be the mother of all Internet battles. With its 500-million user base, anything new Facebook offers could have widespread adoption. “Facebook’s long-term goal with Places appears to be to capture the largely untapped advertising opportunity that local and small businesses offer,” says The Times, although Facebook says it currently has no advertising products for Places. Google, of course, generates most of its income from ads; in fact, AdWords is responsible for over 90 percent of Google’s revenues.

Walter Mossberg, the renowned technology reviewer for The Wall Street Journal, said his test of Places showed that it was “easy to use and reliable, with mostly logical privacy controls, an issue on which Facebook has been bruised in the past.” He does mention, however, that Places is “more stripped down and leaves out some attractive features others [like Foursquare and Gowalla] include.”

But it isn’t really the features that matter, as much as the fact that Facebook is now squarely in the location-based game. That could be good or bad for services like Foursquare. However, Places is definitely one more piece of evidence that Facebook intends to face off with Google head on. Google is making the inevitable move towards social networking features and trying to attract small businesses through location-based initiatives. Places is clearly focused on the small business market as well, because it is expected to help drive consumers to local businesses and will likely take advantage of developing options like pushing coupons or offers to users as they check in.

At the moment, Places is in early stage availability in the U.S. and available only on the iPhone. That will surely change as Places rolls out. And Places will just as surely add fuel to the fire in the Facebook-Google battle.

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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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Over the weekend, Facebook posted the following notice in my account:

Facebook Gave You 10 Free Credits! You received 10 free Facebook Credits (a $1.00 USD value). Use them to buy premium items in your favorite games on Facebook. Go play!

Well, I only find one app to be useful: Scrabble. I used Farmville twice and Yoville once… both with my son sitting next to me begging me to try them out. Once was enough (the second use of Farmville was to give my son a gift that was available only on that day. That is not a judgment of those games. They just aren’t for me).

Note: The other Facebook app that was useful was Statustalker which Craig Ogg, Keith Bussell and I created to enable Facebook users to comment on each others’ statuses. Facebook loved the idea so much that they built it into the site.

While I have no use for the free coins, I had to post a snarky Facebook status about it. It was:

Can I buy a vowel in Scrabble?

with the Facebook notice. This lead to a surprising series of comments…

What does Aunt Naomi have that I don’t?

Don’t answer that question. Aunt Naomi commented that she got 15 free coins. Another female friend told me that she got 25 free coins. A few others had similar amounts. #WTF

I’m sure that there is a wide range of amounts that Facebook users received. Please add yours to the comments section below.

Testing 1, 2, 3

Facebook obviously is testing different amounts. What I’m wondering is it based on past behavior or is it to evaluate the effect of coins on future behavior?

Facebook informed me that my 10 coins had a value of $1 so my friend with 25 coins got $5 of value.

Is Facebook rewarding behavior of people who play games? My anecdotal info says no as two of the people have each played one game and received different levels of coins.

Are women worth more to Facebook? The small sample size I have says yes. This would be inline with the fact that most social gamers are women.

Is Facebook trying to see if coins motivate people and what level motivates people with different psychographic and demographic profiles? I’m guessing this is the one. Facebook must have given coins to 100 million users or more. That is a statistically significant sample. The value that I was given is nothing as the coins can only be used to buy things that have a marginal cost of zero. Give away millions of dollars of free stuff, learn from it and then knock of Zynga and other providers. That sounds like the model here.

So let’s see if we can get some data and figure out what’s up. I assume that there will be a lot more now that Facebook has learned from Zynga, Second Life and other social networks that have been using payment systems for years.

Read more:
Not All Facebook Users Are Created Equal: How Many Free Coins Did You Get?

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When you look at the depth of user data that Facebook possesses, all signs suggest that the social network should be an advertising powerhouse. However, recent numbers show that Facebook ads are worth less than 25 percent the industry average.

Considering the social network for what it is, however, it’s not surprising that Facebook struggled with its advertising model.  Facebook is a collection of features and functions that transcend the conventional web-based experiences around which current digital ad models have been designed. If Facebook has a future as a digital advertising channel, it’s going to have to reinvent its ad space.

Low Value Ad Space

Data from ComScore shows that ad space on Facebook (and other social networks) is worth less than 25 percent the online average. Social network CPMs are so far below average, in fact, that they’ve driven web-wide CPMs down by nearly 20 percent. As AdAge reports:

A recent analysis by ComScore shows social networks, primarily Facebook and MySpace, have over the last year drawn an average CPM of only 56 cents, compared to the $2.43 average for the internet at large. Looking more closely, the ComScore data show that the average pricing for online ads exclusive of social-networking sites, namely Facebook and MySpace, would be much higher, about $2.99 for every 1,000 views; social sites dragged down the average online CPM by as much as 18% over the last year.

While part of the problem is likely the sheer volume of page views that Facebook (and other social networks) receives, part of it is undoubtedly conversion rates. After all, users log in to Facebook to interact/socialize, not consume.

Basically, all Facebook ads are placed out of context.

So despite the depth of user-data that Facebook possesses and the hyper-targeting abilities it could make possible, Facebook needs to find something other than Facebook Ads to appeal to advertisers. User-generated-content isn’t the same thing as consumer content, and users interact with it with it in an entirely different way.

Reinventing the Wheel

While Facebook has the means (i.e. the data) to “hyper-target” users, they still lack an appropriate channel. Essentially, the way in which Facebook users interact with the site renders most Facebook ads untargeted to the extent that they’re unwelcome. So what Facebook has to do is develop a completely new value proposition for advertisers by taking that user experience away from the conventional web.

Basically, Facebook must devise some way to build marketing messages into the user experience. But when all your content is UGC, how do you pursue a symbiotic editorial?

Part of that will come through Facebook Connect – i.e. opening up the social graph to third-parties that provide the consumer content they lack. And part of it might lie in mobile – i.e. the mobile OS that Facebook might be developing.

Exactly what that advertising opportunity is going to end up looking like is anyone’s guess. What is certain is that until Facebook develops and deploys it, their ad space will still be worth bupkis – and if they drag their feet, they might end up being the next MySpace.

Continued here:
Why Facebook Adspace is Worth Bupkis

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If the rise of social networking is going to continue on its breakneck pace of expansion it is crucial that activity on social media sites becomes ubiquitous. With many start ups being built specifically to fuel that expansion social media is on the road to be an any time, anywhere by every one platform. And that, apparently, includes work.

In a study released by Trend Micro of web users in the United States, Europe and Asia social media on the clock showed a marked increase across the board. Now 24 percent of people surveyed in the United States, Germany, Japan and Britain say they use the social web while at work, up five percent from last year.

As Mashable’s Jolie O’Dell points out in her report on the study, some of this can be attributed to the business uses of social media to market a company or interact with customers. O’Dell writes:

“But this increase could also be due to the rise in social media marketing and other social-based multitasking tools as much as slacking off. Remember that, once upon a time, general Internet use at work was considered frivolous; now, most of us use at least some websites to do our work every day.”

I think there are going to some lasting impacts to the study. First, I think these numbers are low, because they only take into account what workers did while using the company’s network (interestingly, the number of company laptop and company smartphone users who access the social web was higher). This does not ask users if they accessed the social web, period. If you take into account what people may be doing on their phone during work hours, the numbers are likely to be much larger.

The troubling aspect is that this may mean another brick in the wall for those companies who see social networking use during the day as a productivity issue.  I agree with O’Dell that social media is an essential specific function for some workers, but also is an essential function for knowledge workers. If you use your social network as a way to aggregate the web and find content that experts are sharing, you will benefit from it as a worker.

Work and the web are forever intertwined now. The key for businesses is finding balance in how much web usage is good for the company without using the web too much or not at all. Harmony can be difficult to achieve, but the need to find it is there.

This shows the need for employers to have a clear and concise social media policy for their employees, an essential for anyone doing business in the social age.  Without a clear policy, employees could be paranoid that what they are doing daily online is going to be questioned or scrutinized by their bosses. But good policies and procedures, written with a specific industry in mind, give everyone clear boundaries to work in.

See more here:
Handling Social Media in the Workplace

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Track the recent stories about Facebook, MySpace, and Google and you may see an intriguing pattern developing. As covered by Andrew Wee, there are rampant rumors that Google made a major investment in Zynga. The rumor-mill has also focused on “Google Me,” a supposed Facebook rival that’s secretly in the works. Meanwhile, rumors about the sale of MySpace are simultaneously circulating. Coincidence? Well, ask skeptics and they’ll tell you they don’t believe in coincidence.

MySpace, Jonathan Miller, digital chief of News Corp., owner of the flagging social network, said at a media conference last week, “We are definitely not in any ongoing talks for a sale of MySpace.” Instead, Miller said, the site will re-launch later this year, whatever that means.

Let’s take that at face value and, for the moment, put MySpace aside (with due respect, just about everyone is putting MySpace aside these days).

Consider the Google Me rumor. Google Me could be viewed as a logical progression from Google Profile and Google Buzz. Google Profile was originally positioned by Google as “how to present yourself on Google products to other Google users.” In addition to text and photos, a user can link to blogs and a Facebook profile. Google Profile, however, became something much more social when it showed up in search results for someone’s name. In fact, if you search on your own name and you don’t have a Google Profile, a Google ad will show up at the top of the page encouraging you to create one.

In February, Google Buzz came along. Google described it as “a new way to start conversations about the things you find interesting.” Google Buzz was built into Gmail, but Buzz updates are also posted on a user’s Google Profile and are immediately indexed for Google Search.

Hmmm, what’s going on here? It looks very much like the not-so-subtle beginnings of a Google social network. Add in Zynga, which as Andrew Wee points out, “is aimed directly at Facebook and the escalating war between the two,” and things get all the more interesting.

But it turns out that Google already owns a social network called Orkut, named after its founder, a Google employee. The problem is Orkut’s biggest user base is in Brazil and India. But now those markets are up for grabs. According to The New York Times, Facebook is “pulling even with Orkut in India, where only a year ago, Orkut was more than twice as large as Facebook. In the last year, Facebook has grown eightfold, to eight million users, in Brazil, where Orkut has 28 million.” It would be a tough sell to grow Orkut’s critical mass to global proportions.

Facebook doesn’t seem to be too worried about Google’s social media initiatives, but the opposite may be true of Google. Todd Dagres, a co-founder and partner at Spark Capital, which has invested in Twitter, tells The New York Times:

“There is nothing more threatening to Google than a company [Facebook] that has 500 million subscribers and knows a lot about them and places targeted advertisements in front of them. For every second that people are on Facebook and for every ad that Facebook puts in front of their face, it is one less second that people are on Google and one less ad that Google puts in front of their face.”

Add advertising to the mix and of course, the battle intensifies.  Things get even murkier. Read CT Moore’s analysis and you’ll see why.

When it comes to social media, Facebook is a global powerhouse. About 70 percent of its half-a-billion users are outside of the United States. At the moment, Facebook is generated about $1 billion of revenue annually. That’s too big a market to ignore. So what is Google doing? Getting into social media.

Oh yes, and when it comes to search, Google is the undisputed leader. So what is Facebook doing? Getting into search, possibly. While Facebook denies it, some believe their Open Graph-enabled web pages mark the beginning of an effort to challenge Google’s search superiority.

Let’s face it – Facebook is to social media what Google is to search. Whatever strategic moves either party makes, chances are it will stay that way – at least for a while.

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As the War Between Facebook and Google Heats Up, Zynga is Just One of Many Battles

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With Social Media as the must-have tool for businesses of all sizes, shapes, and ages, the plethora of options may seem daunting. There are myriad ways to engage your audience including Facebook Fan Pages, Twitter accounts to tweet away, company blogs, company profiles on LinkedIn, patron discounts on Foursquare, YouTube channels and more. Which platform should you invest your time, effort and money in? For small businesses in particular, it is important to narrow down the focus, considering the limited resources.

Before you decide which social media to become involved in, it is important to understand two things:

1. What is your business attempting to accomplish via social media? Are you a small business looking to network with industry members, build your brand name and gain leads? Are you a medium to large sized business who wants to initiate a conversation with their consumers, to remain top of mind and increase customer engagement?
2. What are your consumers like? Will they be responsive to social media? What are their web habits? What will help them “click” into your brand?

Once you have determined what you hope to achieve by foraying into social media, and how you plan to target whom, it is time to choose the channel(s) that will best help you achieve this.

Let us briefly look into what a handful of platforms can offer:

Twitter: Networking with industry members, getting people to know you (and vice-versa), engaging with current and potential customers, exchanging and keeping up with news. For more in-depth tips and tricks, check out Twitter Marketing A to Z.

Company blog: Show your expertise by writing about your views and opinions on the industry and its happenings. Make new business and new projects announcements, brag a little, and show some praise for good work done by other relevant parties. Connect your blog to readers via LinkedIn, Twitter or Facebook.

LinkedIn: Your company profile on LinkedIn can be a prime way to connect with other members in your industry (via the Groups feature), to hunt down talent (you are able to view hundreds of relevant resumes), and to keep interested prospective employees in the loop in regards to open positions, internal changes and upcoming projects.

Facebook: A Facebook Fan page is a great way to go if your business is big enough to have “fans.” People must know you enough to want to keep up with you, and view your updates amongst their friends’ updates in their news feeds. You can engage customers and potential clients by posting news, views, links to the company blog, to videos on seminars/talks delivered by your in-house experts, and watch the comments and feedback pour in. Check out the Adidas Originals fan page to see how they display product information along with ads, events and World Cup involvement.

Foursquare: If your business involves a physical establishment that users can “check in” to, this is a pretty smart way to gain from WOM (word-of-mouth marketing). To keep customers coming back and continuing to Check In, offer incentives such as Starbucks’ discounts for Mayors (frequent patrons).

Looking at a quick example, a small business would be best served by creating a company blog, a LinkedIn company profile and a Twitter account. There is no real and immediate point to establishing a Facebook Fan page because the business is not big enough to have acquired fans yet. Although several businesses appear to want to indulge in all available social media channels, there is a fine line between maintaining a multi-platform presence, and maintaining unnecessary real estate on these networks.

That being said, some businesses are able to successfully manage a multi-platform social media presence that is underlined by a cohesive strategy, where each channel complements the other. An example of this is luxury brand Louis Vuitton – their Facebook page streams live event coverage including runway shows during Fashion Week. It is also used to announce upcoming events and product releases. Photos are posted to engage fans by asking which celebrity wore which of their products best. Furthermore, they keep videos of all past events ready for viewing on their Facebook page as well as their YouTube channel, using Twitter as a way to provide brief, quick updates on all these items.

So before you jump into the vast and evolving realm of social media, ask yourself which channels can help you be most effective and best benefit your business as well as your customers. Quality definitely reigns over quantity when it comes to social media and your business.

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Which Social Media Channel Does Your Business Need?

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Put away your pitchforks and torches. It appears the uprising against Facebook has fizzled.

After The New York Times dissected Facebook’s convoluted privacy settings and then touted a rival, a backlash against the social networking giant started brewing across the web.

Facebook responded (fairly clumsily and eventually) with some new privacy settings but still has a probe pending from the U.S. Congress and other folks who have just opened their eyes to the fact that there is a website out there sitting on 400 million users’ personal data.

That data is, of course, a gold mine for Facebook and its advertisers. But bring up that fact and everyone starts to get a little squeamish. Which is why some users started “Quit Facebook Day“, a movement that on March 31 would climax with millions of people walking away from the tyranny of Facebook.

So, what happened on March 31?

Not too much. Quit Facebook Day’s website says just over 36,000 people committed to the cause, while a poll on Mashable showed 63 percent of readers against the idea.

Why no traction for the fight against Facebook?

Quite simply, people have too much invested in the site to walk away. While quitting Twitter or ignoring your MySpace are easy enough, Facebook’s ability for you to load up your stash of content and games makes the ties too strong.

If you walk away from Facebook  you may be abandoning hundreds of personal photos,  a Farmville gaming campaign you’ve been working on for months, or an easy directory of your contacts with their websites, phone numbers and daily activities.

Facebook has developed an environment which has become indispensable for most of its millions of users. There are going to be fringes of hard-core social networking types out there who explore and gravitate to other platforms, but for the majority of users who were part of Facebook’s big growth spurt in 2009, the site gives them all they want.

Now that the privacy has calmed down some, many users are still going to move along unaware of the debate. What they want out of Facebook they are getting out of Facebook. What Facebook gets out of them is out of sight and out of mind.

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Why The Uprising Against Facebook Flopped

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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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Maybe it’s out of desperation, or maybe it’s shrewd marketing – but the latest word is that content publishers are looking at Foursquare as a potential content distribution channel.

Mike Shields, writing in Mediaweek, says Foursquare has recently picked up AskMen.com, The New York Times, The Wall Street Journal, and Time Out New York as partners. Now remember, Foursquare isn’t officially in the content distribution business. Its reason for being is to connect friends to friends in a local place like a city through their mobile devices. Users “earn points and unlock badges for discovering new things.”

So why, exactly, would the likes of The New York Times and The Wall Street Journal be interested in Foursquare? Well, both newspapers are pushing out New York City-related content. The Journal is averaging five New York posts each day… clearly in support of the New York City edition it recently started publishing to compete with The Times. In fact, The Journal already has 5,000 Foursquare followers – pretty impressive for a buttoned up financial publication.

For publishers of content about local hotels, restaurants, bars, and hot spots, Foursquare makes perfect sense, and that’s why Michael Martin, a senior editor at Time Out New York, likes Foursquare. He tells Mediaweek, “It’s so applicable to everything we do. I think this will be a major place where people will consume actionable content.”

The story behind the story, however, is the on-going turbulence in the traditional content publishing business. As we’ve discussed numerous times in ReveNews, newspapers and magazines are scrambling to keep readers engaged. Most of them are losing subscribers by the thousands as widely available online content drives readers away from traditional channels.

It’s no surprise that these content publishers are looking at anything and everything to cast a wider net. If that means publishing a special edition on iPad, so be it. If that means using every social media network available, go for it. And if that means exploring an emerging social tool like Foursquare for mobile content distribution, well what the heck, they’ll try anything.

Ironically, though, it’s not the wider net that these publishers are really after. The golden ring is localizing their content down to a micro-level.

Foursquare has grown to some one million users on the basis of micro-localization. A publisher who can successfully serve up fresh unique material at a localized level may find a lot of people choosing that content over a competitor’s.

In previous posts, I discussed the move towards localization by magazines, the growing use of QR codes to drive customers to local businesses, and, more recently, Google’s renewed emphasis on local markets.

With some major content publishers now jumping on board, it’s probably time to define localization as one of the key emerging trends of 2010. The timing couldn’t be better for Foursquare.

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Publishers Eye Foursquare for Localized Content Distribution

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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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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.

The rest is here:
Cancel Your Scammy Offers? Lose Revenue

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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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traditional marketing concept

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For some reason, Facebook can’t seem to keep out of the news when it comes to privacy issues. Unlike recent issues, the latest event comes from a software glitch rather than a poor policy choice.

This month, capping a long string of recent security and privacy blunders, Facebook allowed users to see the private chats their friends were engaged in. Another glitch allowed users to view the pending requests of their friends. In their defense, Facebook staff immediately brought down the chat feature and fixed the bugs to prevent any additional information leakage, and things were back to normal within a few hours.

Noble as their efforts to fix this latest privacy breach, Facebook has earned quite a reputation as being completely carefree in regards to their users’ privacy. This is evident by CEO Mark Zuckerberg’s statement in a January interview with Mashable where he stated that users no longer care about privacy.

“People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people. That social norm is just something that’s evolved over time.”

There are two issues I find contradictory in this quote. As I see it, the first addresses the social norm. Yes, we are much freer with sharing information nowadays. We use tools like Facebook and Twitter to tell people what we are doing all day long and it’s quite normal to find out that an old friend from high school is on their third cup of coffee and ready to freak out with the guy in the next cubicle. People share information like that all day on social sites because it is harmless banter among people we generally know and trust. It is a norm because it represents normal conversation among friends.

What isn’t normal is allowing anyone with Google to find out who my friends are, where I went to school, my favorite sports teams, the names of my children, etc.

The second part of Zuckerberg’s statement that needs evaluated is his use of the word “people”. He claims that people have become more comfortable sharing information, and this much is true. But just because someone shares it with others online doesn’t make it okay for Facebook, or any other social networking service, to feel they have carte blanche to distribute that information publicly.

Just because I tell my friends online that my family is going on vacation next week doesn’t mean I want Facebook to tell everyone. If I make the decision to share it with a few people it does not give someone else the right to make it public information. Period. As far as I am concerned, end of argument.

Ultimately Zuckerberg’s statement is simply wrong. Watchdog groups and Congress are putting corporations like Facebook to task on how information their users share online is handled for a reason. If people truly do not care about privacy anymore there would have been no outcry when suddenly their private chats were shown publicly; instead users would have mistaken it as another anomaly in the constantly shifting bipolar landscape of Facebook’s UI.

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Facebook Acts Like Users No Longer Care About Privacy

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