Total BS

Forrester recently did a presentation on Facebook marketing, i.e., an argument for social ads. Forrester’s research is useful. Its insights can be a bit suspect though. The recent Facebook presentation is the red-headed stepchild I’ll be picking on today; an argument for a marketing strategy that felt more like an advertisement for Facebook.So the deck started off making an argument for “Why Facebook?” Lots of traffic, good on-site metrics, juicy audience demographics, supposed to eclipse MySpace in 2009. Great. Whatever. You want a hooker, go to a Reno. We get it. (Actually I was surprised to see Friendster traffic increase 65%. I don’t know if it refers to the past year or if it’s a future projection, but I guess that’s where all the eons.com ex-pats have been migrating to.) We marketers make this argument all the time, because it’s the most obvious one, and because it requires the least amount of lying and number fudging on our part.Then it went into explaining how communities inspired trust, including a slide that highlighted the top 10 activities on Facebook, none of which included shopping or anything remotely money-related. This has apparently inspired trust, and resulted in us placing greater trust in our social circle, than we do in advertisements. I assume this is because we appreciate our friends not randomly chiming in with flashing banners and 30 second ad spots during our conversations.Then Forrester mentions that there’s scads of user and network data that we never had access to before. Except that anything that’s important, Google, Yahoo, Amazon and Microsoft already do have access to, not to mention all the financial institutions that are selling the information that actually matters, like how much you’re spending, what you’re buying and the fact that you’re about to do a big faceplant on your 3rd mortgage. But anyway, for the sci-fi geek chick Claremont grad, have we got an offer for you. We know you’re a big Star Trek, Buffy the Vampire Slayer, and Battlestar Galactica fan, so we can offer up cool, relevant ads like um, the latest ST, BtVS and BG DVDs. It’s so relevant! (Not so relevant for the married guy receiving dating ads though.)Then Forrester goes into the “bevy” of marketing opportunities on Facebook, which really reads more like a marketing spiel from the LinkExchange banner ad days. But this includes:

• Data on profiles and networks (which is great for trivia, but mostly useless in reality)
• Facebook pages and sponsored groups (which became popular on MySpace, but is just as useless today as it was before)
• A variety of ads (banner, contextual, social), which are based on the CPM model which has proven its ineffectiveness since the AOL/Compuserve/Prodigy triumvirate days.
• “Applications,” which as far as I’ve seen, seem to do a good job of attracting VC money, but do a poor job of actually building a sustainable, profitable business.

To cut a long story short, then the presentation went into showing off a variety of crap with marketized names. Like how the Facebook inbox is the new hipper e-mail, except it sucks way more and is liking riding a bike with your shoelaces tied together. I guess all this was supposed to show how innovative Facebook has become, when in actuality, it just reminds me how close Facebook is becoming to MySpace.Then there was a couple case studies. The failure was Wal-Mart, which if you’re familiar with some of their other web promotions, shouldn’t come as a surprise. On one hand, they may be web 2.0 failures, on the other hand, they have a $200 billion market cap and make more revenue than any other company in the world. I’m sure they’ll take that trade-off. Interestingly, the successful case study was Apple. I’d argue Apple is never fair to use as a case study, because their user base is so incredibly, illogically fanatic, that everything they do is a huge success or a complete failure. Either way, the numbers (and probably the returns) weren’t that impressive.About 3/4 of the way through, Forrester finally gets to the challenges. Which read sort of like challenges that I’d make up in a strategy deck, e.g., program may be too successful, super quick growth could cause infrastructure difficulties, success inspires jealousy, etc., rosy challenges like that. But they never mention what I’d consider the most important challenge:The complete uselessness of a “social” ad. At some point, I’d like to know what the value of a social ad is to a normal person.Nobody ever mentions this. Facebook’s marketing platform only exists, because at some point they have to start turning a profit (which apparently isn’t going to start next year) to appease their investors. So they started shoehorning ads into the Facebook user experience, because you know, this is web 2.0, and advertising is the only way to make money (which really is fine by me, since at some point, those dollars will get back to what I do), hoping that they’d strike it rich following the Google model. Except they forgot that for an ad to be effective it has to be:

1. Targeted, which you could argue that Facebook allows you to be super-targeted (that’s their shtick). Except that most of the “advanced targeting” information is either done better in other ad systems, so broad it’s redundant, or (ironically) so granular it’s useless. Plus, FB doesn’t have a back-end system tying all those various details together like say an Amazon can. And unlike Amazon, none of those interests are tied to things that matter - like purchases. So the fact that I chose not to purchase “V for Vendetta” on Amazon.com, after viewing the product page for 5 minutes, means a heckuva lot more than having “V for Vendetta” in my favorite movies list. 
2. Contextually relevant, which will be the eternal uphill battle for social ads. Because when is the right time to butt into a friendly conversation with a “relevant” ad? How bout never (unless you want to end up like this). It’s like when you’re walking down the street talking to your friend, and you see your ex standing out on the sidewalk, wearing a double-sided sign, handing out flyers in front of Radio Shack, and you’re so embarrassed, you avert your eyes and quickly hustle to cross the street, to take the way-out-of-way dirty alleyway route, just to avoid that whole interaction. Why would we believe that people online would respond any differently? 

So now Facebook’s once clean, totally functional interface has been plastered with ads that are a step classier than the stuff that runs on warez sites. And they’re stuck trying to sell a broken ad model to advertisers, by occasionally selling out their user base. On the plus side, it’s relatively cheap, and probably not any less effective than a Super Bowl ad. On the downside, that seems to defeat the purpose of the value of an Internet ad.Besides, social ads already exist. Amazon’s recommendation system is more targeted, relevant and useful than any social ad that Facebook will ever serve up. To be honest, if there’s ever an SNS that marries the mundane with the money effectively, I’d put my bets on Amazon running it.It feels like the goal of social ads is to eventually leverage your best friends by turning them all into micro-marketers. It’s like Zombies and Werewolves, only with ad jingles and kooky characters. It’s a marketing wet dream I guess. But where’s the benefit for the normal people? If I want to make a recommendation to a friend, I’ll personally make that recommendation. If I want to be part of a pyramid scheme, I’ll join scientology.

We have now hit a point in time in which advertising is positioned as a value-add, not to marketers, but to users. I can’t say I’m not intrigued by the concept, if only to see if people will buy the shtick or see through it as total BS (ah yes, my first BS-related pun ever).Facebook notes:

Advertising doesn’t have to be about interrupting what you’re doing, but getting the right information about the purchases you make when you want it.

Much appreciated, I guess. And it makes perfect logical sense. This is why the contextual Google ads are such a success. But it fits better on Google, because “searching” has a much more natural bridge to buying. “Socializing,” however, doesn’t have that. Consequently, the ad model feels unnaturally shoehorned into Facebook. Never have I visited Facebook with a product or purchase intent in mind. Not to say it won’t work - at worst, it’ll provide better results compared to the randomizer ads they put out now - but the opportunities for it to work will be much more limited compared to Google, IMO.Also on a separate note, there’s been some recent buzz about Facebook replacing Yahoo as part of the “big 3,” along with Google and Microsoft. That’s the most retarded thing I’ve heard this week. And anyone who thinks so, is by extension, a moron. Facebook gets to be in the big 3 when it stops having its traffic quintupled by Yahoo or when its real market cap hits $37B+, not when internet geeks play chutes and ladders with imaginary numbers.

I get the impression that every new startup’s business model is based on the assumption that they’ll get enough traffic to become profitable via advertising. In fact, Facebook’s whole multi-billion dollar valuation seems to be based on the assumption that they’re going to become the next Google. Note to world, there’s only one Google. Even Yahoo and Microsoft are screwing it up. If advertising is your business model and you’re not an ad server, ad network or technology/media power, then you don’t have a business model.People still hate adsContextual ads doesn’t buy you love. They’re more tolerable, because they’re more useful. But as they become more ubiquitous, they’ll become less effective, simply because of the general dilution that occurs when the entire category shifts to the same model.There’s just one GoogleAdSense as an advertising platform means your advertising-based business model is just as good as your competitor’s, and no better. Google has a continuously evolving ad serving algorithm that helps them adapt and innovate. Unless you also have a continuously evolving advertising technology, I highly doubt your business will be buoyed by advertising dominance, unless…You have massive reachEven dumb ads work fine. Ask the major TV networks, ask ClearChannel. This is where efficiencies of scale can pay off, in that if you’re able to leverage the efficiency of contextual ads and get it to scale with massive traffic then you can have a fraction of the relative “traffic” that HBO gets and still be as profitable. However, sites that get this much traffic are of a select few. The long tail means 99% of everyone out there still sucks. So if you’re one of the 99% of the tail that sucks, you probably shouldn’t be banking on advertising building your millions.

The Facebook platform is pretty frigging smart. Actually, the notion of creating an open environment in order to extend and accommodate to your user’s world is fairly obvious, but kudos to them for pushing through with it. It seems like as soon as sites get successful, they get greedy and build walled gardens to prevent users from escaping. Well, at least Facebook realizes that they are not the center of their users’ world. It’d really only take one misstep (though it’d have to be a huge misstep), for their users to ditch FB and head off to another network. But the value add provided by the FB platform gives more reason for people to stick around. It also dilutes the impact of a misstep (although it’ll end up diluting the fervor of the diehards, but alas that’s the price of success and getting big).I’d still like to see FB open up more and adopt Open ID and making it easier to interface with FB outside of facebook.com, but this is a good first step.Now when I say Facebook, the new Google, I’m referring to the platform environment, the dangers of the open API. This is somewhat of a trojan horse godsend for a lot of these smaller SNSes like Pickspal or Flixter, because in a snap of a finger, suddenly the big, hairy issue of reaching network effects has been seemingly solved. From a traffic and user engagement standpoint, it’s great. I would guess that the business goal for most of these guys is to get exposure and try to bring back traffic back onto its main site. Theoretically this would also enable them to focus on site features that are more contextual to the behavior and purpose of the site and offload the broader social networking basics to FB.In the short to medium term, I think this is fine. But eventually there’s going to be conflicts of interests for some of these guys (I’m going to call them mini-SNSes to try to avoid ambiguous pronouns). A lot of the mini-SNS’ brand engagement is going to happen on FB, so it’s going to dilute the mini-SNS’ brand image and user loyalty. Getting on the FB platform may help these mini-SNSes get a million users quicker, but it’s not going to make it any easier to keep those million users loyal.I’m also curious about how it impacts the profit model. All everyone has at this point is just advertising. And I have a thought or two about that in general that I’ve been meaning to share, but that’s neither here nor there. But if 95% of a mini-SNS’ user engagement happens on FB, that might help the mini-SNS’ user and engagement numbers, but it’s not going to bring revenue in. And FB isn’t going to allow these mini-SNSes to reap advertising dollars on FB either. But I’ve only thought about it for about 5 minutes, so who knows. I would guess (or more likely hope) these guys have a much better plan moving forward.My last point is really the whole reason for why I wrote this post. I guess I could’ve been more brief, but whatever. Google rolled out features to Google Maps earlier this year that killed off about 600 little Google-Map API based startups. This is the danger of relying completely on another’s API. If the sugar mama decides to cut you off, you get screwed. And if the sugar mama decides to move into your space, you get killed. The platform is great for the users, all the buzz is well-deserved (even though it’s not like they cured cancer, it’s just an obviously solid business decision. This is the problem when everyone keeps making stupid decisions, it makes the good decisions seem like mind-blowing, world-changing decisions.), and for FB, this is going to catapult their growth even moreso. But I can’t help but think that a year from now, we’ll be seeing a Google Maps redux.

…too much cash, no $@#!ing clue.What could you do with the $1-1.6 billion they have earmarked for Facebook or Bebo or the next hot SNS?Steps 1-5:Fix Yahoo! 360 so it doesn’t suck (or just start over): $25 million (I’m being very generous with figures here)Pay the top 100,000 MySpace/Facebook/Bebo/etc. users $1,000 each to hang on the new and improved Yahoo! 360. (total: $100 million)Pay each of those users $10 for each new friend they bring over, up to 90 million friends: $900 million.Massive marketing/PR for general promotion and to handle all the bribery bad press: $200 millionCharitable donations, just for the heck of it: $375 millionStep 6: ???Step 7: ProfitGrand total spent: $1.6 billion, give or take several hundred million dollars on tactical variations.

(reposted from 11/16/06)Closed messaging, a.k.a., the faux email chains that occur wholly inside social networks like MySpace, Facebook, etc. drives me nuts.I understand why it’s valuable. It increases traffic exponentially. Arguably MySpace and Facebook aren’t social networks so much as email services. It’s like you’re checking your email 10+ times a day, only when you do it 10+ times on MySpace, its value goes up another million dollars.But it’s a massive step-back from the “never delete anything ever” ethos espoused by gmail and all the newly humongous free email services. It’s also counter to the whole open-source movement, where everyone’s pushing for interoperability and open APIs.The problem as a user is a loss of control. Email services may not last forever. But I know I’m much more likely to use gmail in 5 years than Facebook. So when I eventually abandon my Facebook account, any messages I have within that account will be gone forever. While this may not seem like a big deal right now to most people, months, years down the line, when you’re trying to find some obscure, but highly important thought… it’s going to be a bummer, to be flippant. Furthermore, in the here and now, it splinters my communications. Did I mention that thing about that place in my email or my Facebook or my X social networking account?I’m also aware that closed messaging is sort of an offshoot of the PM feature that’s been available on message boards since forever… but I feel like the PM is an circumventive anachronism of an era of 2MB email accounts. And to be honest I’ve never liked the PM feature. It’s never going to go away since it’s a basic feature now, but it doesn’t serve any purpose. Don’t PM me, email me, I’ve got gigs to spare. And if you catch me while I’m on the site, that’s what live messaging is for (ironically, I’m willing to overlook the interoperability of IM and live messaging services, maybe because archival hasn’t been ingrained as a standard feature set).If I was an email service, I’d probably try to get ingrained with a social network, and make the messaging automatically archived within my email account as well. Getting people to switch email accounts is extremely difficult, but this seems like a great foot in the door tactic.