The buzz is mixed, to be kind, so far.
After Move On’s rallying cry, Inside Facebook said this too will pass. But Arrington disagrees. And it doesn’t help to have an AP story about it (this one is from last week), or further news that makes Facebook seem less than on the up and up. Venturebeat weighs in, wondering if there’s a there there (there is, sort of, it concludes). Dare isn’t happy.
Meanwhile, Danny points out that the real revolution in advertising is already happening, it’s called search (I agree, but I see FB ads, or something like them, as a key step in the evolution of search ad platforms).
I have been talking to folks about this, and continue to, I know I’ve promised deeper thoughts, they are coming…slowly.
More on Beacon, FB Ads
The buzz is mixed, to be kind, so far. After Move On's rallying cry, Inside Facebook said this too will pass. But Arrington disagrees. And it doesn't help to have an AP story about it (this one is from last week), or further news that makes Facebook seem less…
John, I am not sure I would agree with you on this one. I don’t see how platforms like Facebook can become search ad platforms. Unlike in search via Search engines the activities taking place in social networks aren’t fit for social ads.
The common mistake most web 2.0 companies are making is that they treat advertisement as the main revenue stream or even as venture capital. They try to leverage the need for a brand to expose itself into a business model. It sounds like a great plan. It provides the web 2.0 company a stream of revenues by providing the advertiser with a podium. And it provides the advertiser a “cool” way of exposure towards potential customers. But the flaw in the business model comes with the third actor on the platform, the user. It is easy to step over the needs of a user, when your business plan clearly shows sky high advertisement revenues and potential acquisition by one of the biggies like Google or Yahoo.
But the user is not always in need of exposure to advertisement. That is where things go wrong. We are building these great advertisement podia, but the fans aren’t there to see them. The easy way out is to provide the user with something else that is valuable to him, and then hassle him with the advertisement anyways, cause that’s what the business model says we ought to do. The user gets free social networking capabilities, free storage, free profiles, free social graphs, and a free podium to express himself. That’s great, honestly, but it doesn’t resolve the main business model issue. As a consequence, the web 2.0 company starts monetizing the social graph, the profiles, the platforms by introducing “targeted” ads to its users.
But what happens to things that contain no value to the user? Exactly. They get ignored. And there is your catch 22. The web 2.0 business model is financed by advertisers who pay Facebook and others a great deal of advertisement spent this year, with a false illusion of reaching their targeted audience. The harder they try, the more they will be ignored.
And the user? He doesn’t care. He gets all spoiled with “free” stuff, that isn’t free at all. But the bill isn’t payed by him, so who cares. I think indifference is the most worthless driver for a business model.
I have to disagree with Alex above and in a glib way, add two cents about one way social media can be another game changer for advertising.
It’s really all about the potential shift from push to pull. That is once we’ve implemented rigorous social media approaches that takes into account my worlds and needs in those (see my Costanza Rule for more on that), then if this means that ads are getting boosted by a recommendation from my social network then awesome.
Real examples are:
I’m looking for a ski trip right now for the family to the Alps. Why can’t I flip a switch somewhere that means I’m now being advertised to heavily, with additional boosts from my social connections.
I just had to experience the purchase funnel for a new washing machine. Total waste of time, again the switch with recommendations.
Perhaps, it comes down to this evolution:
Search = Yield X Bid
Social Media = PermissionFlag X MyProfile X Yield X Bid X Recomendations
@simonb The examples you describe are handled already in a much better way by Google. You really don’t need social networks for that (apart for the user recommendation aspect, but that is hardly a Facebook revenue stream). In most cases social networks are used for interaction, and in your interaction you rarely need advertisement. Only when you are looking for something they make sense. And think about how often you are in a situation where it comes handy. Earlier examples of beacon for example show that “my friend has just bought a chair at furniture.com”. Big deal.I wasn’t looking for a chair, so the message is meaningless to me. The number of times you are really looking to find something is so small compared to the time you spend on Facebook. It is complete nonsense to build the business model on ad revenues. It just doesn’t provide enough user value. And I personally do not believe in business models that do not provide the user with value.
There’s no proof *anywhere* that Facebook has the tools, audience or purchase intent to create a great ad system. To use hyperbole about how Facebook is the next AdWords is silly and fanciful. All the anecdotal feedback so far has been around how poorly the ads work, or how low the click rates are. This is not the type of early feedback Google was getting after they launched AdWords.