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Advertising
Facebook's Strategy Targeted/Behavioural Advertising Examples: +If you list Britney Spears as your favourite singer, her concert advertisements will be sent to you. +If your marital status is set at engaged, bridal shop advertisements will be sent to you.
-Retailers that signed up for Beacon include: eBay, Sony On-line Entertainment, Busted Tees (clothes), WeddingChannel.com, TripAdvisor, NYTimes, AllPosters.com, Blockbuster -Official Facebook Beacon website: http://www.facebook.com/business/?beacon
Concerns/limitations Facebook faces certain concerns on two fronts: (1)Its nature as a Business (2)The nature of Social Networking Balancing both users' wants/privacy rights as well as the company's own profit margins is a tricky task, and this balancing act is bound to raise certain concerns with regards to privacy and the like. (1)Invasion of Users' Privacy Facebook's Beacon tool sends out information on the user that he or she might not necessarily want to share. When Beacon was first introduced, opting out of Beacon was hard to do as it could only be done just before a purchase was made on an affiliated website. However, after much protest from Facebook users, a general “off” function under the Facebook Options site was made available. Concerns however have arose over Facebook's use of personal details, and till today one cannot naturally assume a social networking site like Facebook will minimise the use of one's personal information. (1)Overbranding The drive for more investors and profits to further fuel its continued growth means that more and more unique ways of advertising will continue to be implemented. Amazon.com has recently gotten in on the act with the creation of two Facebook applications, one of which tracks a consumer's wishlist and enables the user to share it with his friends. The danger in opening up Facebook to profit-motivated ventures is a possible overbranding of its services/applications. If it is overdone, Facebook might well become the next MySpace, which is heavily saturated with advertisements.
(2)Freedom of Expression: A double-edged sword Facebook's Events feature has capitalised on the nature of social networking in that users can easily create common interest groups that has an extended reach beyond one's own circle of immediate friends. Furthermore, the nature of the virtual domain means that users are more empowered to broadcast/discuss issues that might be politically, religiously and/or racially sensitive. This has resulted in negative implications in the form of censorship. It is currently banned in Syria, Burma, Bhutan, UAE and Iran- countries that do not practice real freedom of expression. On the flip-side, Facebook can also be used not only to promote good causes, but extremist causes as well. Notable example: Private group called Ahlus Sunnah wal Jama'ah, an off-shoot of an Islamic extremist terror group, is said to be in operation on-line since early 2007. In this case, the nature of social networks means that extremist groups do not have to transverse physical limitations in their recruitment drive, thus making detection of them a lot harder.
Facebook's Potential (1) Portal Services Yahoo has continued to survive in the cut-throat world of Internet businesses via its transformation into a portal offering a wealth of functions/tools. One can read localised/international news, check his E-Mail and auctions, play games or put up a personal ad all through the main webpage.
Imagine Facebook featuring... Regular news feeds (Local/National/Topical) on a person's Facebook page = Merging external news with 'internal' friends newsfeed. ==> Facebook will then be a one-stop site for any Internet user with varying interests. This will result in higher frequency of use as well as ensuring Facebook's sustainability.
(2) Activism The use of Internet networks to promote and stimulate causes is not a very recent invention, and even in the early days of Friendster people were already creating imaginary 'Friends' that acted as a 'Group' that Friendster users could join. However, the defining feature that sets Facebook apart from its competitors is its ease of use in creating interest groups or events that have in recent months garnered considerable attention worldwide.
==> This leads to a dissolution of country-centric barriers, and people are increasingly united by a common cause or interest rather than traditional linkages like race, religion or citizenship. The possible effect... Official groups, governmental groups or actually any group/individual with a motive could use Facebook as a medium in which to reach the masses and highlight issues that in the past got buried under the happenings of more publicised events. Perhaps we could one day see the PAP using Facebook to recruit more Youth PAP members in a bid to capture the attention and loyalty of the younger generation of Singaporeans.
(3) Marketing Platform Instead of solely relying on targeted advertisements, Facebook could also branch out into the arena of marketing other services/products through its applications. An example would be an application aimed at fans of TV series, whereby users of the particular application can buy products like apparel/souvenirs based on the TV show. In an interview with The Economist, Reuben Steiger, founder of a marketing agency for social networks and virtual worlds, also mentioned that “brands need to design 'experiences' that use the social graph to engage groups of friends.” A relevant example- A wrestling association wants to drum up ticket sales for an upcoming match, and they build a widget that turns users into wrestlers, whereby they fight bad guys and win gifts. This in turn enables greater awareness of the wrestling match, and possibly increased ticket sales.
Conclusion: At the end of the day, the future of Facebook will ultimately hinge on it extending its use beyond that of a mere social networking tool. Looking at the relatively short lifespans of most social networking sites, it might be wise for the management to explore alternative sources of revenue, as well as to solidify its current platforms of advertising. Whilst Facebook's valuation has been pegged at astronomical numbers by big companies like Google and Microsoft, these valuations do not translate to real monetary assets. Mark Zuckerberg, CEO of Facebook, has been touted by Forbes as the world's youngest ever billionaire, but the fact remains that he is only a 'paper billionaire', with no actual physical assets to his name. Like-wise, valuations of Facebook give investors a rough picture as to the net worth of the company, but whether or not these valuations can translate into real profits is another question altogether. The question ultimately hinges on how the Facebook API and its developers are handled in the near future. The current nature of the Facebook API allows external developers to build applications to market their own services/products, but there is no monetization of these services at the current moment. Furthermore, Facebook developers also need added reason to stay on and build more applications for Facebook, as the nature of the social networks means that there is a limitation in which these applications can be 'marketed' or 'sold' to the users. As such, the finite nature of these applications/widgets' reach means that developers will move on to other pastures sooner or later.
Thus, in a nutshell, Facebook needs to find a balance between making the developers stay on as well as open up more avenues of income for their own continued growth and survival. In a sense, it might be wise for Facebook to move from merely being a medium to that of a provider of services/products as well, or at the very least draw up agreements with these developers to enable another source of revenue. Facebook has tons of potential, but if the potential is not utilised, it could very well turn out to be the next Friendster.
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