Tagged: Facebook

Don’t drag your website into Facebook

The other day I came across this post from eConsultancy while digging around for some examples of corporate use of Facebook.  The author, Jake Hird, had selected what he considers 25 brilliant examples.  What immediately struck me was that none of them looked like Facebook pages, they all looked like websites.  Indeed, this was the criteria the author was using: these were considered brilliant because they had ‘got round’ what was seen as the inherent design restrictions of the Facebook format by creating separate tabs as ‘landing pages’.

What sort of insanity is this?  Surely, the key to successful corporate usage of Facebook is to develop an approach that reflects how people actually use Facebook, based on an understanding of what it is that Facebook is adapted to do.  Facebook is not a website, it is a tool that small groups of people whom already have some form of social connection, use to preserve and enhance that connection.  That is a very different function from that of a website, which is designed as a destination that you drive the maximum number of people to in order to give them information.  The Facebook format is not something to be ‘got around’ it is something to be embraced.

Jake’s logic seems to be thus:  once upon a time we had a thing which we understood called websites.  Then something new came along called Facebook.  Facebook was really different and we needed to find a way to understand it so we decided the best way to do this was to try and turn it into the thing we understood.

I know this article was written some 18 months ago, time for both the author and the companies concerned to learn the error of their ways – but having checked the Facebook pages concerned, nothing much has changed.  Why?  Well I guess there are some powerful forces at work here.

First is fear of the unknown.  Marketing directors want to be reassured that all the knowledge and experience they have accumulated in the world of mass media, can easily be exported into this new world of social media.  It can’t, because social media operates to a different set of rules – as much as anything else, social media is not something you buy, it is something you participate within.

Second is the fear of digital agencies that their business model is melting.  Digital agencies, the smart ones anyway, know they are in trouble.  To quote the boss of one such agency “how are we going to make money building websites in a world where anyone can now make a website”?  However, if they can persuade marketing directors to spend lots of money creating customised Facebook pages or building expensive brand communities – that can be a lifeline.

Third is Facebook itself, which receives virtually all of its revenue from marketing directors and needs to keep them and their agencies happy and reassured.

There is a fourth, which is the fact that a Facebook page is a much better data capture opportunity than a website – hence the current obsession with securing Facebook Likes.  In fact most Facebook strategies go something along the lines of: drive people to the Facebook page, incentivise them to click the Like button, then get them the hell out of there into a digital platform better adapted to doing what it is We want to do with them.  But is this behaviour really sustainable and is it not fundamentally missing whatever genuine opportunities Facebook might present?  Facebook is, in many ways, just a new form of social behaviour.  That is certainly how its users relate to it.  And these users are only going to be prepared to ‘engage’ with those brands that understand and respect this.  (Long term this is also a bit of a problem for Facebook, because you can’t own a form of behaviour).

Personally, I think the sign of an effective corporate use of a Facebook page is that it looks like, well, a Facebook page – an environment that looks and feels exactly like the environment Facebook users are creating for themselves.  It should be a space where people who want to come and talk to a brand, can come and talk if they want to.  Frequently, of course, these people are going to want to ask questions or raise complaints – but that’s fine, it’s called customer service.  Of course, you don’t want people asking questions or raising complaints all over your website – yet another reason why turning your Facebook page into a website is a stupid thing to do.

The fact is that we are now operating in a bi-polar world – the world of traditional media and the world of social media.  The traditional media world isn’t going to go away in a hurry, it is just going to shrink in importance as the social media space grows.  The defining challenge for any marketing or communications director (in fact any CEO) over the next 10 years is how to operate with a foot in both camps and the key to this is the recognition that both spaces are fundamentally different: what works in traditional doesn’t work in social and visa versa.

Selling to the Facebook focus group (not a good idea)

Everyone in marketing (and also now politics) is familiar with the focus group.  This is technique where you have a structured conversation with a very small group of people selected to be representative of your whole target audience.  Focus groups work because sufficiently skilled practitioners can draw conclusions and insights from that very small group that are relevant to the larger group.  Their most common usage in marketing to understand how people will react to new products, but mostly how they will react to new ads.   (As an aside, I have always found it amazing how many brands come to understand what consumers think of their products or services only through the lens of how they understand their advertising).

The relationship a brand, or the researcher representing it, establishes with the people in a focus group is quite a strange one.  Quite often, the brand may not even reveal itself, but the participants are frequently encouraged to disclose highly personal information about themselves, which they do both because they are paid a small sum but mostly because they feel flattered to believe that their opinion counts for something.   After the session ends, the relationship finishes.  It is very rare to return, or even report back, to the participants unless they have been recruited as part of a panel designed to see how thoughts and opinions shift rather than define what those opinions are.  Certainly the brands concerned don’t believe there is any advantage in preserving a relationship with attendees at focus groups or even encouraging the participants to buy their product or service: you don’t sell to the focus group, you get insights from the focus group in order to then sell to the much larger group of consumers or customers.

Facebook, as far as a brand manager is concerned, is basically a focus group Continue reading

David Mitchell on Facebook: “Listen guys deal with it. When you are getting something for free, you’re not the customer, you’re the product”

David Mitchell is not, by his own admission, on the technological cutting edge.  But this gives him the perspective that allows him to really nail Facebook in a way that the Scoble’s of the world might miss.  Read his column published in this Sunday’s The Observer.  It is very funny, as you would expect, but it has some spot on observations.  Thus:

… when Facebook signs a multimillion-dollar advertising deal with drinks manufacturer Diageo, there’s not much parents can do except complain and stock up on Hello Kitty cocktail glasses. Facebook points out that alcohol-related pages are only accessible to users pretending to be over 18 (those pretending the opposite really cheapen the brand) and says: “We care a lot about people, young and old.” We’ll be the judge of that, HAL. It didn’t say: “Listen, guys, deal with it. When you’re getting something free, you’re not the customer, you’re the product.”


Facebook isn’t aspiring to be Cable & Wireless or AT&T, major players within a medium; it wants to be the whole telephone network.

Read it and chuckle.

Facebook f8 changes: making it easier to do the wrong thing

Facebook has recently unveiled a whole host of changes. Essentialy these appear to be about moving beyond the ‘like’ and giving brands more sophisticated ways to integrate themselves into users’ ‘stories’.   At one level these changes may well be successful but at another, they may simply be a means of encourging brands to do the wrong thing more effectively.

I must confess I wrote-off Facebook as a significant tool for marketers a long time ago, largely because I couldn’t see how the obsession with collecting ‘likes’ and recreating your website in Facebook was actually going to create anything of sustainable value.  Instead I have been advising organisations to focus on the discussion capabilities of Facebook – using it as just one community where you can encourage, usually very small numbers of people, to talk in more detail about aspects of your brand if they want to.  I.e. creating a Facebook embassy which is there to service the needs of people who, for whatever reason, want to use Facebook as the environment to ask you questions.

However, I have recently ‘re-engaged’ with Facebook – not professionally, but personally.  I first signed-up to Facebook in the early days, and all the people I was ‘friends’ with were not actually friends, but the social media geek squad.  My real friends were not on it.  Because a blog and Twitter were much better tools for professional use I largely ignored Facebook, simply dropping my WordPress feed into it.  Now however, many of my real friends are on Facebook, so recently I have purged my friends list of all my professional contacts and started to link-up with proper friends again (although for some reason, while I have got Robert Scoble off my friends list, I can’t get his content out of my news feed.  Why is this, is it testament to the awesome invasive power of Scobleness?)

And now I am starting to use Facebook as it is meant to be used, I realise I have absolutely no desire to use it to ‘engage’ in any way whatsoever with anyone, or anything, other than my friends.  I don’t want to have my Facebook space cluttered up or intefered with by brands.  I suspect I am not alone.

Yesterday also received a lengthy update email from Diaspora.  Here is a clip from it.  Diaspora* will never sell your social life to advertisers, and you won’t have to conform to someone’s arbitrary rules or look over your shoulder before you speak.  And because your information is yours, not ours, you’ll have the ultimate power — the ability to move your profile and all your social data from one pod to another, without sacrificing your connection to the social web. Over time, this will bring an end to the indifferent, self-serving behavior that people can’t stand[3] from the walled gardens that dominate social networking today. When you can vote with your feet for the environment where you feel safest, the big guys will have to shape up, or risk losing you.

Now Diaspora is a long way from challenging Facebook – but it is swimming with tide of social media, because it is grounded in achieving the necessary social permission to operate.  As distinct from Facebook, whose need to justify an excessive valuation now means it is chasing the commercial permission to operate.

Social media: creating riots and busting rioters

Here is an alternative take on the UK Riots and usage of social media.  Much has been made of the role of social media in creating the riots.  Here is the counter point – the role of social media in busting the rioters.

Take a look at the screen shot below.  @anniecat84 has seen one Jay Hasan bragging on Facebook about trashing Croydon.  She has Googled “how to report rioters” and then taken a screen shot of the Facebook page and broadcast it on Twitter via Twitpic.  There is now a Facebook page with 2,500 followers called “Jay Hasan NAME and Shamed Croydon Rioter” albeit some of the outrage vented here appears to be highly racist given that Jay is assumed to be of Asian descent.

Interestingly Jay Hasan has used the rioters favoured weapon, a Blackberry, to update his Facebook page.  I wondered if he had linked his Blackberry messages to his Facebook updates – thus rather foolishly breaking the encrypted protection Blackberry’s give their users.

The lesson from this, as far as social media is concerned, is that despite what some elements of the media and police might suggest, these riots were not created by social media.  Social media is a tool that can be used to create riots, or catch rioters, or spread racist views, or spread anti-racist views.  It isn’t inherently pro-or anti-anything.

What is perhaps more disturbing is the view being advanced that these riots have nothing to do with political or social factors – it is simply pure criminality and the perpetrators should be locked up and if anyone else is responsible it is their parents.  Riots don’t happen in healthy functioning societies (except in France).  The fact that we are having them indicates that something has gone wrong.  If politicians look to shift the blame away from themselves onto parents or anyone else (as those of all mainstream parties are rushing to do) this will be a massive evasion of responsibility.

On the Today programme this morning, Sam Gyimah, Tory MP for Surrey East opened up his comments on the riots with the observation that the rioters were displaying a dangerous sense of entitlement and lack of responsibility.  It occurred to me that the same might be said of the worlds’ bankers – a fact that cannot have failed to come to the attention of said rioters.  Whatever we have been doing for the last 30 or so years the net effect has been a significant widening of the gap between rich and poor – with the creation at the top of a super-rich elite, increasingly out of touch with the rest of society and the creation at the bottom of a disenfranchised underclass, similarly out of touch.  In such a situation we cannot be all that surprised when shop windows get smashed and buildings get burned (and multi-million bonuses get earned).


Google versus Facebook: a battle for social consent

The recent launch of Google + has prompted much commentary on the battle between Google and Facebook and the need for Google to establish a foothold in the social space where people, rather than algorithms, do the work.   Google + has still not gone on general release, but the consensus seems to be that it is a good product which stands a better chance of success that Buzz or Wave – Google’s previous ‘Big Social Thingies’.  The smart money is saying that it might not kill Facebook, but it could kill Twitter.  Ultimately though, it doesn’t matter what the digerati think, a social tool only becomes relevant when it secures mass adoption, or, as Clay Shirky has put it – tools only become socialy interesting when they become technically boring.

All this speculation his has prompted me to think again about the whole Google versus Facebook battle and conclude that we are missing a trick here.  This isn’t simply that the business model for both companies is based on the assumption that both are forms of media and thus advertising platforms, when in reality Facebook in particular is more akin to an infrastructure (as previously blogged here and here in relation to LinkedIn).  It extends to the fact that society as whole has not developed a form of social consensus around the business models of Facebook and Google (et al).  Basically Google and Facebook have not yet acquired a social licence to operate and, potentially, may not be able to secure such a licence.

This may sound a pretty abstract concern and I can bet  considerations of social consensus have not worried the awfully clever chaps at Goldman Sachs when they have been devising their models for valuing Facebook.  But I think they should be worried about it, and this is why.

There is a form of social consensus that has developed around the business model of the traditional media.  This is based around the recognition that being a conventional media business involves a lot of cost – not just in making the content, but because distributing the content is expensive.  This high cost of distribution is what actually creates the high cost of producing the content – it has to be high quality / mass interest in order to make it worthwhile putting into expensive distribution channels.  Therefore if we want to receive the content the mass media produces, we have to give something in return – we either pay for it, or we allow our consumption of it to be interrupted by advertising.  This basic social contract is hardwired into our understanding and behaviour.  Even if individual citizens don’t connect all the dots, society as a whole has worked this one out and thus this business model has gained social consent.  It is a balanced relationship – what we give is reflected in what we get: advertising revenues or subscriptions cover the production and distribution costs – with a modest margin on top which represents the media’s profits.

How much money is enough?  Why Craig Newmark is smarter than Sir Martin Sorrell

A few years back, when Craigslist was eating up the classified advertising lunch of regional newspapers in the US, Craigslist and founder Craig Newmark drew the ire of the likes of Sir Martin Sorrell, boss of WPP, the world’s largest advertising and media network.   He accused Craigslist of destroying value, in the sense that here was a market that was worth billions and Craigslist was taking it apart and not replacing it with a model that yielded similar billions.  For a chap like Martin Sorrell this just seems inconceivable – why waste an opportunity to make billions for yourself.  Craig Newmark himself was often asked why he wasn’t making more money from his idea.  His response to this was incredibly revealing in more ways than one.  He simply said “I don’t need that much money”.  Now while Craig, unassuming chap that he is, may have meant that he, personally, didn’t need or want  billions of dollars; his reply actually reveals a much more profound truth.  Craiglist, quite literally, didn’t need that much money.  It replaced something that cost a great deal of money to organise (regional newspapers and classified advertising) with something that largely organised itself, requiring only some software, some rules of participation and some server space.

The rules of basic economics dictate that in a functioning market economy, in the medium to long-term you cannot make super-profits. A couple of hundred years ago David Ricardo proved why this is the case, based on the theory that marginal revenues can never significantly exceed marginal costs.  If you apply Ricardo’s theory to Craigslist, Craig may have been able to charge millions for his service initially, but because the costs of being Craigslist and entering this market are so minimal, it was always going to be easy for a competitor to set up an offering at a lower price and relatively soon the market will stabilise at a point where the price of using the service (value opportunity) sits pretty close to cost of providing the service.  And because the cost is minimal the value opportunity will also be minimal.   Craig Newmark was not destroying value, he was actually liberating capital to be employed more efficiently elsewhere.  Mr Sorrell, arch defender of capitalism and the free markets that he is, really should have known that Craigslist is capitalism and free markets in action, even if Craig himself eschews the behaviours of a traditional capitalist.

Why is this relevant to social consent, Facebook and Google? Neither of these organisations are making super-profits.  Google is certainly making healthy profits almost all of which comes from advertising around its core search product.  Facebook had estimated revenues in 2010 of $2 billion and while we don’t know how this translated into profits this figure seems very low when compared to a valuation of $41 billion.  Well, as with Craig Newmark you have to ask the question “how much money do you they really need” – what does it actually cost to deliver Google or Facebook.  And the reason this question is important is because it is this – the true marginal cost – that will ultimately determine what it is that people will be prepared to give them in return. Of course we think that we don’t give Google or Facebook anything, because they don’t charge us to use their services.  However, in reality we do give them something.  We give them information about ourselves.  This is where the problem starts, because we are only just beginning to understand the implications of giving away vast amounts of personalised information, not just through our usage of Google and Facebook but actually via our participation in the social digital space.  It is not just a question of the commercial value of this information it is also a question of understanding a whole host of implications – both positive and negative – that stem from giving away this data.  In all probability no-one, not even Google or Facebook, really has a thorough grasp on the implications of a world where so much personalised data in being generated and has the potential to be used either by themselves, sold to, or otherwise obtained, by interested parties.  One thing is for certain, the individual users of Google and Facebook have no idea about the consequences of giving away so much knowledge about their lives.

Understand the true cost of Google and Facebook

If you want to start to get a handle on exactly what these implications are, a very good place to start is Eli Pariser’s book The Filter Bubble.  The Bubble in question is a unique to each one of us, individually crafted via our actions and choices as tracked via our digital activity.  This bubble not only controls what information comes in to us, it also reflects an image of us to the outside world – albeit an image that has huge potential for distortion, manipulation or mis-use.  Pariser does a very good job of highlighting the dangers of creating highly personalised worlds,  showing how this can isolate us from the experiences and serendipitous encounters that are necessary both to develop a balanced world-view and also generate creativity and innovation.  He also touches on the dark side – the potential for personalised digital information to be used either in ways which are far removed from the intention or original usage when we decided to share this in the first place, or to create identities of ourselves which are either misleading or far more revealing than we would wish (or believe we have given consent for).   One example that caused me to thumb-mark a particular page was the fact that banks can, or are, using social data to determine creditworthiness.  And this is not just derived from data you may have shared about yourself, but data derived from your network of friends or contacts.   Thus, if you have friends who have not paid their bills, this will have a negative impact on your own credit score.  This one single fact should be enough to make anyone think twice about their participation in social networks.

The other, rather scary thought, is that there is no one single ‘digital file’ held on all of us.  Neither Facebook or Google can easily pull their own files on a particular user – largely because that file is so big and distributed.  Instead information is pulled out through windows shaped by the questions that are asked – you can isolate specific characteristics, but you can’t get the whole picture.  At the moment, in the case of Google and Facebook, these questions are framed by advertisers and the need to become more targeted in the selling of products and services.  Advertisers don’t really need to know the whole picture, they only need to know the bits of it relevant to what it is they are selling.

Where this becomes more worrying is in areas where it is in someone’s interest to make broader or more significant conclusions about an individual.  Take the example of a government intelligence agency.  All of us share a very great deal in common with your average terrorist or member of an organised crime syndicate.  We go to the same shops, buy similar clothes, eat the same food, listen to similar music etc.  In fact, the vast majority of what we do makes us look exactly the same.  It is of course, a very few but highly significant, differences that mark us apart.  The problem is that the instinct and abilities of most intelligence agencies are not to try to find evidence to disprove who is a terrorist or criminal – it is to look for similarities in patterns of behaviour and then search for more evidence to confirm these initial suspicions.  This means that it is theoretically possible for you or I to very easily end-up on a list of terrorist suspects, despite that fact that there may be huge amounts of available evidence to dissprove that conclusion, were anyone actually looking for it.  But because we don’t know we are on the list in the first place; neither we nor anyone else, really understands exactly what activities got us onto that list and no one is looking for the easily available evidence to get us off it – on the list we remain.  We, and to extent even our interrogators, are powerless because no-one really knows what ‘the internet’ thinks of us, we can only derive an imperfect picture of ourselves based on the question we ask it.

We give more than we receive: re-negotiating a social contract with social media

I could go much further into this whole issue – but the important conclusion from all of this is that the implications and value of what we are giving away is far greater than what we imagine it to be.  To take us back to the issue of social consent and the bargain we have struck when using ‘free’ social media services – we are giving away much more than we are receiving in return.  This fact is already implicit in the business models or valuations of both Facebook and Google.  In the instance of Facebook it is reflected in the fact that its valuation is many times greater than its current earnings would suggest.  In the instance of Google it is the fact that Google is probably making super-profits – but they are hidden.  Taken in isolation, its core search product is hugely profitable – but the organisation is using these profits to sustain investment in acquisitions and in developing range of ancillary products that are loss making, but which it believes are necessary to creating a sense of lock-in to the Google world, or which have the potential to generate more data and thus improve the proposition to advertisers.

The question therefore is what will happen as society as a whole develops a greater awareness of the value and implications of giving away information?  What will happen as we collectively comes to negotiate, or re-negotiate a social contact with social media?  What is unlikely to happen is that Google or Facebook will have to increase their offer.  People are not going to say that the best way to even up the relationship is for Facebook and Google to give us more.  Instead it is far more likely that people will start to demand that Google and Facebook take less – and how much less they have to take brings us back to Craig’s question and how much money Google and Facebook actually need in order to provide their services.

In Facebook’s case, the answer is probably “not a lot”.  What it took to create Facebook was a clever geek, a couple of good insights and some server space.  Outside of the actual costs of running the servers and developing the product – Facebook has added more cost, but this is related largely to the ability to generate revenue via advertising and these costs are essentially discretionary or are derived from the business model Facebook has decided to pursue, rather than the business model it has to pursue (albeit in reality the business model it has to pursue has now been set via the value it has placed on itself via the selling of shares in the business).  In essence, Facebook now needs to generate a lot of cash to fulfil its valuation expectations – but it doesn’t need a lot of cash to actually ‘be’ Facebook in the same way that Craigslist didn’t need a lot of cash to ‘be’ Craigslist.

In Google’s case the answer is more complicated.  Google is technologically a far more sophisticated set-up that Facebook.  Its core search algorithm and its associated technical processes have a great deal more intellectual property within them.  However, Google is not the only search engine, but it is the most popular search engine.   At one level you could point to the existence of several much less popular alternatives as evidence to demonstrate that in order to secure the profits Google makes from search, it is necessary to carry the costs of providing the rest of Google World thus creating the necessary lock-in or search loyalty.  It is difficult to make this call, and in many ways, the difficulty in getting a real handle on the business models of Google and Facebook stems from the absence of a real competitor.  Maybe it is not so much the absence of a competitor, but the absence of a genuine market within which the rules of competition have become established.  And implicit in the creation of a genuine market is the necessary element of social consent – or perhaps, in light of everything discussed thus far, informed social consent.

Taking less – why this may be the key to comparative advantage

Both Facebook and Google have grown up, and shaped their business models, in a digital world characterised by the absence of rules.  The social digital space in particular is new, it’s very different, and we are only starting to work out how to deal with it.  It is therefore quite likely that as we start to develop the necessary rules and as genuine markets start to emerge, this will be an environment that is increasingly hostile to the business models of the pioneers than opened up the space in the first place.  For example, as society starts to recognise the implications associated with giving away data, rather than demand more in return, it will instead demand far more restrictions around how personal data is used.  This may  manifest itself in demands for greater privacy or control from the likes of Google and Facebook – demands that these companies may not be able to satisfy and still continue to operate to their current business models.  But what is more likely to happen is that competitors will emerge – but these won’t be like Google or Facebook.  The main reason they won’t be like Google or Facebook is that they won’t have to generate the quantity of cash Google and Facebook need – either to sustain an artificial valuation or to preserve an enormous corporate empire, 90 per cent of which is loss making.  They will be able to approach consumers and say “we can do everything that Facebook does (because it is not difficult or expensive to do this) but what we don’t need to do is sell your data”.  And because of the emerging sensitivity about giving away data, this benefit will have a high perceived value.  In effect, these new players will be the ones that have the competitive advantage necessary to negotiate the necessary social licence to operate.

Predicting the demise of Google and Facebook may seem a little far-fetched, especially as they currently are the masters of the digital universe.  However, it is worth taking note of a couple of things.  First, in relation to this idea of social consent, we have recently seen some tumultuous events within the traditional media – the phone hacking scandal that has engulfed News Corporation.  Amongst other things this has caused News Corporation to close the News of the World, the UK’s largest circulation Sunday newspaper.  The reason it was forced to do this was due to the fact that the News of the World lost its social permission to operate.  It was also forced to abandon its bid to acquire all the shares in Sky TV – again not because it was forced to do so, but because it became clear that it failed to create the necessary social consent.

Second, we are starting to see the signs that the whole issue of usage of personal data is emerging out of the shadows.  Facebook has obviously had problems about privacy in the past – the introduction of Beacon being the best example of where it has already had its fingers burnt.  Google has escaped significant attention, probably because its products are less social and therefore seen as less intimate or revealing about the nature of their users.  However, take a look at this ‘viral’ presumably released by Microsoft – characterising the Gmail Man as the postman that reads all your mail and then tries to sell you products.  This is a clear indication that privacy has been identified as Google’s Achilles Heel and is an issue worthy of competitive exploitation.  We can expect more of this.

I might also suggest that Google has already been weakened by its desire to collect data in that, pre Google + it has not scored too many successes with its recent product launches.  My suspicion as to the reason for this is that its product development has not been sufficiently driven from a fundamental understanding about what ‘social media citizens’ really want, but more by Google’s desire for them to use certain types of products  – in large part products which will yield useful data.  A good example of this is the now largely forgotten Sidewiki.  As I identified at the time, the sting in the tail of this particular product was the fact that it required you give Google access to your browsing history.

Does this mean that Google and Facebook are wilfully manipulating us?

Probably not.  Google in particular has been very transparent about its ambitions to create a personalised web.  At worst you could accuse Google of a level of naivety in not fully understanding the social consequences of what they are doing.  This is not surprising since Google is at heart a technology company run by geeks – and geeks are notoriously bad at understanding social consequences.  Google also is popular and has a range of fantastic products.  It can therefore generate some comfort that it is ‘doing the right thing’.  Facebook is much less transparent, but there again it offers much less than Google and has much more it needs to gain – because it isn’t sitting on top of super-profitable search algorithm.  Facebook is also much easier to replace than Google and we are already starting to see Facebook alternatives that are explicitly making a play about data protection and privacy.   In both instances the driving commercial imperative is around capturing as much attention and usage as possible – thus making themselves harder to replace.  In essence it the Wild West 2.0 – staking out as much territory as possible before civilisation and its attendant wagon train of rules and regulations catches up.  This isn’t wrong or evil, it is just competition and capitalism.

Should we be worried?

We should probably be vigilant, rather than worried.  When revolutions happen, they tend to generate good stuff and bad stuff in equal measures.  The trick is to be alert so the bad stuff can be managed or controlled and the good stuff enhanced.  At the end of the day, it is going to come down to the construction of some new rules and regulations – either those that are legislated or which derive from social permission (as in fact most rules of society do – we don’t ‘not do stuff’ simply because it is illegal, unless you are a hedge fund manager).  We need to play a part in shaping those rules.

On the other hand, it is probably Facebook and Google which should be most worried.  The Wild West is not going to be wild much longer and they need to start developing a business model which is not simply based on squeezing-out the competition but is based on a world where people attach a much greater value to the data they decide to share.  And this doesn’t mean demanding more bang for their byte – it means either sharing less bytes or demanding much greater control over where those bytes end up.

Groupon: four reasons why it might actually be the “next big thing”

We have been waiting for a “next big thing” since Twitter went mainstream some years back.  Could it be that Groupon is going to be it?  I am coming round to thinking it might be because it has a number of characteristics I find attractive.

1. It is relevant and real time

Groupon is about stuff that is happening right now in your area.  It is very specific, relevant and useful – all the hallmarks of what the world of social media (i.e. the world where information is not married to expensive distribution technologies) is all about.  No-one is going to ask the question “why should I bother with Groupon” in the same way people still ask “why should I bother with “Twitter?”.  When you see what it does, it is obvious how you use it.

2. It runs with the community tide

I have always believed that the “next big thing” in social media would be a new behaviour rather than a new tool and I have also believed that this form of behaviour would be linked to the formation of communities.  In particular that people would get together within communities to manage their interactions with institutions, in preference to allowing themselves to be managed within communities controlled by institutions.  While Groupon is a tool it sort of fits the bill in that a large part of what it does is based around the creation of communities – communities of purchase.  And also that it effectively provides a medium within which individual consumers can manage their interaction with brands.

3. It uses editorial narrative

The unique feature of Groupon is that it has an editorial department of 400 people to effectively “write the ads”.  This recognises that the one-size-fits-all approach to creative that characterises traditional advertising just doesn’t work in social media, which is a medium much more adapted to stories and storytelling.

4. It makes money

For the outset, Groupon has a real business model for making money that is rooted in what it does as a business.  It doesn’t rely on the Facebook / LinkedIn approach which is all about building a user base first and then trying to impose a revenue model on top.  In this respect, it is akin to Demand Media – another company I like – in that its business model is 100 per cent adapted to work in the social space and aligned against how its customers use the service.  This is unlike Facebook or LinkedIn who try and raise revenue on being a media platform or information channel to their users when their users actually use the service as a communications infrastructure.

Certainly – if I had money to invest I would far rather invest it in Groupon than in some personal data storage facility like LinkedIn.

The future of advertising, media and Facebook (in Bulgaria)

A couple of weeks ago I was in Sofia, Bulgaria, to run a workshop and speak and the annual gathering of advertising and media folk, organised by the Bulgarian Assosication of Advertising Agencies.  I was doing this wearing my hat as a member of the faculty of the EACA School of Advertising and Communications.  Essentially I was there to explain, as politely as possible, that the business model of advertising is broken.  (Here is the presentation for those interested – it will make only vague sense since it is mostly just a collection of images Sofia 22 March 2011)

In the run-up to this I was also asked to answer some questions about the future of advertising, traditional media and Facebook for the online publication Human Capital.  Here are the answers – for those who speak Bulgarian, but I thought I would also publish them here in English, since it is relevant to advertising and media everywhere, not just in Bulgaria.

What are the major differences between traditional media and social media from advertisers’ perspective?

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Facebook: the new AOL

Continuing the Facebook / business model theme, here is an interesting observation I saw on Social Media Today from Jim Worth.  He says that Facebook today reminds him of AOL in the 1990s.  AOL became the gateway people used to get onto the internet in much the same way as Facebook is the gateway people use to do social media.  But once through the gate, people often move on.  That, in a nutshell, is the problem Facebook faces.  Failure has stalked all of those who try and hold onto the people they take through the gateway – from AOL to Yahoo.  Why should Facebook be any different?

Why Facebook is abandoning individuals in favour of communities

Here is a bold claim.  In social media you can’t make money out of individuals, only communities.

Here’s why.  In the good old days, the way you made money out of media was by being a platform that allowed commercially sponsored messages to be placed in front of lots of individuals. For this to work well, the message had to be be very effective (which is why advertising creative directors made lots of money) and the media had to attract lots of individuals. The more individuals a platfrom could attract, the more money it could charge for its real estate.

This model doesn’t really work in social media, because, as we are slowly starting to realise, platforms such as Facebook are not really media platforms. Facebook can more easily be understood as a tool or an infrastructure. Despite what the film says, it is not a social network, it facilitates social networking. There may be huge numbers of people using the infrastructure – but you can’t reach ‘all of Facebook’ in the same way as you could reach ‘all the readers / viewers’. In reality, Facebook is an eco-system comprised of a vast number of tiny interactions bewteen very small groups of people. This creates a problem, because the commercial opportunity within these types of interaction is highly restricted. In the same way that no-one would want a commercial message inserted into a phone call, people don’t see a role for commercial intervention or interuption in the individual, small scale, relationships people have on Facebook.

This is a big problem for Facebook, because its current very high valuation is based, in large part, its status as a platfrom that can access millions of people. It has the millions of people, but it cannot provide the access in a way which makes commercial sense and complements the way in which people use the infrastructure. It can only sell itself as an advertising platform, but it is slowly realising that the value of an individual person within Facebook is an awful lot less than the value of an individual reader or viewer. Facebook is coming face-to-face with one of the fundamental rules of commercialising social media: in social media, you can’t make money out of individuals, only communities.

Essentially, there are very few chinks in the armour within individual interactions in social media that allow a credible intervention by an institution or commercial organisation. That is not to say that you should abandon the individual. Listening to individuals and their conversations, and responding where necessary is still a hugely valuable exercise. It is just that 99.99 per cent of all social media activity is un-receiptive to commercial intervention and thus it is just not scalable as a way of reaching lots of people.

However, this starts to change when you stop focusing on the individual and start to focus on the communities that individuals might form (focusing on behaviours, not on platforms or tools). Community is undoubtedly the ‘Next Big Thing’ in social media. The community is the new individual and the community probably represents the only sensible entry or engagement point for most institutions. In working out how to extract commercial value from community it is important to recognise one of the other fundamental rules – which is that individuals will be reluctant to allow themselves to be managed within communities controlled by institutions, rather they will prefer to form communities to manage their relationships with institutions. As people become more familiar with the tools of social media, they will work out how easy it is to create communities that help them ‘do stuff’.

Facebook understands this – which is why it has recently made changes to Facebook Groups and Facebook Pages which are designed to make it clear that Pages are where corporate organisations can have their Facebook outpost but that Groups are for individuals. Facebook is going flat out to encourage its users to aggregate themselves into small communities (Facebook Group functionality starts to de-grade once the Group exceeds 250 members), because it knows that its user base becomes commercially much more valuable as a large number of small communities than as an even larger number of individuals. The problem, of course, is that there are many other tools individuals can use to create communities – many of which are better than Facebook and thus Facebook is in a race a aginst time to try and establish the behaviour of community formation within Facebook in order to try and steal a march on the competition.

This is consistent with Clay Shirky’s assertion that revolutions don’t occur when societies adopt new tools, but when they adopt new behaviours. It is also consistent with Facebook’s objective of being the single tool you use to “do” all your social media, rather than being an application you can use to integrate tools produced by others.