The successful IPO of Facebook, the flak surrounding Twitter’s decision to censor some tweets, and Google’s weaker-than-expected 4th-quarter earnings all point to one of the big events of our times: The crazy, chaotic, idealistic days of the Internet are ending. Once, the Prairies were open and shared by everyone. Then the farmers arrived and fenced them in. The same is happening to the Internet: Apple, Amazon and Facebook are putting up fences — and Google is increasingly being left outside.
The old Internet on which Google has thrived is still there, of course, but like the wilderness it is shrinking. Often these days, we sign up for Facebook or Amazon’s private version of the Internet. At other times, we use a smartphone and download an App instead of using Google search.
Investors are already placing their bets on who the winners of the new Internet will be: Over the past five years Amazon’s shares, despite their recent fall, have risen 370%. Apple’s are up 438%. Google’s, meanwhile, have merely risen by 17% in all that time. It is still the early days of this long-term trend, but my hunch is that this gap in performance will widen over the coming year — and that Google’s long slow decline has already begun.
What makes Google’s predicament so serious is that it has little to do with technology and everything to do with business models. You can buy or copy technology, but changing a business model is about the hardest thing any company can do. Google’s business model, and nearly all its revenue and profits, depend on the Internet remaining open. When we search, Google pockets billions from advertising. If the old Internet is changing, Google’s original way of doing business loses value.
When Google reported its results two weeks ago, the first headlines focused on the 25% increase in fourth quarter revenues compared to last year. Investors, however, focused on the drop in the cost per click that Google is able to charge advertisers. The main reasons for the decline in this all-important metric is increased competition from Facebook, Amazon, and Apple.
Start with Facebook, which has erected a cyber fence around its 800 million-plus users and refuses to share some important data with Google. This means that Google’s searches are not quite as valuable to advertisers as they used to be when the Internet was open and when Facebook was much smaller than it is today.
Amazon is increasingly playing a similar trick — but with a twist. Amazon has taken Google’s freely available Android operating system and adapted it for its new Fire tablet. Amazon gets to free ride upon Google’s software, in other words, while the search giant gets nothing back in return. No data, and no advertising revenue.
Apple’s land grab, meanwhile, may be the most definitive. The Apple universe is like a cable TV network that owns content or aggregates it. It’s phones, computers and tablets are like the set-top boxes your cable company gives you. The content you consume might be a film that you download, a song, a book, an application or something you buy on line, like a pair of shoes. And none of the data Apple’s customers generate is available to Google. (Amazon basically has the same arrangement going with its Kindle and Fire. The only thing it doesn’t own is the network, but it doesn’t matter: Once you log into Amazon with a password, you’ve left Google’s open Internet.)
The danger to Google, in other words, is that as social networking, smartphones and tablets increasingly come to dominate the Internet, Google’s chance to earn advertising revenues from searching will shrink along with its influence.
Yes, Google has the Android and Google+, but these may not be enough to fight the shift to the closed Internet. Google+, of course, has just a tiny fraction of Facebook’s scale and there’s currently little reason to think it can catch up. The Android operating system, also an attempt by Google to build its own internet eco-system, is a more conspicuous success. Most commentators focus on the rapid growth of Android and the fact that it has greater market share than the iPhone.
But this analysis misses the point: The Android may have market share, but more than half of mobile searches come from iPhone users. Google may have developed Android but, unlike Apple’s iPhone, it does not really control it. Licensees like Samsung and HTC are able to adapt Android software to their own ends. And smart companies like Amazon are getting a free ride on Android while sharing little of the spoils with Google.
Don’t get me wrong: Google is still a force, just as Microsoft, Intel and IBM are. But they are no longer at the epicentre of the zeitgeist. Like Microsoft before it, Google can fight the good fight on many different fronts. Whether it can ever find an engine of growth capable of supplanting its core business is another question.
About the Author
Keith Woolcock has been covering technology as an analyst and journalist since the mid 1980s. He has worked for Nomura, Merrill Lynch, the Daily Telegraph and the Mail on Sunday; appears regularly on CNBC in London; and in 2010 founded 5thcolumnideas, which provides global thematic research and spots important investment trends — especially in technology – for institutional investors.
Yesterday as I logged in my Facebook profile. I got an update that one of my cousin’s having a birthday. I sent a birthday message to her and she was really in a state of shock by receiving a birthday text from me. Honestly speaking it was the first time I was wishing her in her 25 years lifespan so far. I was inclined to think that maybe if Facebook was not there to update me about that I would have spent my entire life without wishing her on her birthday. And the point which lingers in my mind is that,”Are we so much dependent on Facebook?” The obvious and honest reply is, YES!
Facebook took over Orkut and it got the hype in no time. Even Mark Zuckerburg wouldn’t have thought that Facebook would be such a success while devising it. More than 500 million people are connected to each other through this channel. You can talk to people of entirely different origin, place and race by the click of a single button and what differentiates Facebook from other online messengers is its compatibility, user friendly environment and the amount of applications for interaction.
Facebook is really on a roll and is a great medium to get connected to your friends, relatives and even random people. You can find your old friends; can contact your distant relatives, share photos and videos within a blink of an eye. I even know a couple who met on Farmville and got married later on. So people are not only communicating, sharing information and playing games, they are also getting into a relationship via Facebook. Now you’re talking!
The huge impact which Facebook made on our lives is addictively phenomenal. I used the term addictive because people on our planet would even ask the angel of death to wait a moment so they could update their status just before dying.
Facebook is not only playing its part in making the world literally a global village but it has also helped businesses grow. The other day I was discussing about the benefits of advertising your business via Facebook. If we consider Facebook as a country, with a population touching more than 500 million users it would be ranked 6th according to population. Targeting these 500 million users using a single banner advertisement is not only cheap as the reach per person will be quite low but will also yield great output as the advertisement can be targeted explicitly.
With the revolutionising of the world technology has been on the rise every second. Technology promises greater prospects to follow and our dependability on it is increasing by time. And Facebook is just the beginning of an entirely new Digitalised Era.
About the Author
Umair Maqsood is a marketing graduate and a professional blogger. He loves playing football and sneaking into profiles of others on Facebook all day long. Follow him on Twitter @mumairmaqsood
Privacy challenges by public interest groups and the FTC are threatening to dismantle or seriously curtail the behavioral targeting model of interactive advertising as it stands today. Fearful of damaging relationships with their readers, many publishers are removing third-party widgets and other technologies when those technologies are found to capture and sell user data without the user’s express permission.
Even Facebook itself has cracked down on unauthorized data scraping. Recent “Do Not Track” efforts are trying to move choices about data sharing from publishers to the people via browser technology. But these are merely symptoms of a larger problem with interactive advertising: a lack of transparency. It’s a problem that new social tools will play a significant role in addressing.
Rather than an endgame where consumers completely block any sort of data sharing, I see a future where marketers take the high road and both sides benefit from better quality data, advertising and content.
The concept of “Permission Marketing” isn’t new; in fact, Seth Godin’s 1999 book about “turning strangers into friends and friends into customers” seems remarkably prescient in today’s age of “Friending,” “Liking,” and “Following.” Godin told the (then e-mail-dominated) interactive industry, “By talking only to volunteers, Permission Marketing guarantees that consumers pay more attention to the marketing message. It serves both customers and marketers in a symbiotic exchange.”
Today, technologies like Facebook Connect and OAuth are helping to redefine the concept of permission marketing. Using these technologies, brands, retailers, publishers and other sites are able to actively establish a permission-based relationship with their users and customers on their own websites. Now websites have the opportunity to embrace transparency, to be upfront with people during the registration process about how their data will be used, as well as how it will benefit both parties.
We have a new generation comfortable using Facebook and other mobile apps and who, according to recent survey data, are quite willing to share personal information with companies and brands in exchange for value provided. They are also relatively unconcerned about the security of data they share on social networks. The bottom line is that this type of authorization-based relationship between brand and user is likely to become the norm.
This Year’s Model
So what exactly is the data and advertising opportunity for sites? The Huffington Post is the poster child for this new social data-based permission marketing approach. Readers register on the site using their existing Facebook, Twitter or other social identity, thereby giving HuffPo access to data with which the site can personalize the user experience.
For readers, this means they can see what their friends are reading and sharing on their site, giving them a powerful social filter for relevant content. It also means The Huffington Post can sell advertising on their own site based on everything they know about the user from a social perspective.
I had a chance to meet Huffington Post CEO Eric Hippeau at last year’s IAB leadership summit, where publishers get together to talk about the future of interactive advertising, and he shared with me that their integration and application of Facebook Connect and similar technologies to create a social news experience has been the key driver of their phenomenal traffic growth over the past year plus. Social advertising is also a key source of their revenue growth. HuffPo considers their site to be in the category of social media, and structures their ad sales team to serve that unique buyer. For publishers and advertisers, this approach has the power of Facebook ads, yet is superior because it combines the best of both worlds –- deep context plus social data.
While Social registration, also known as Social Sign-On, is the foundation for this new relationship-based model, the layers on top of that foundation are the most promising for the future of advertising. In addition to basic demographic targeting, sites could offer advertising based on interest data, targeting movie fans or iPod fans for example. Sites could also sell against social influence and activity — factors such as the number of friends, propensity to share and history of driving referral traffic, or even the number of items “Liked” as an indicator of engagement. Reward programs driven by game mechanics are a key part of the nurturing process in this new model, where a loyal, engaged and most importantly non-anonymous audience is the new currency of advertising.
Sites and brands need to ask themselves: What am I offering people that they will truly value in exchange for permission to talk to them as a friend and not an anonymous user? Badges may not be right for every site experience, but successful apps and other web experiences like those on The Huffington Post prove that it is not an unattainable goal.
As with all new models, there are challenges to address. Sites need a critical mass of users to grant them these permissions in order to sell advertising effectively. Privacy concerns with social network data will evolve over time and regulatory pressure will certainly cause the interactive industry some headaches as we move to a new equilibrium. But it is inevitable that a permission-based model will prevail, and those that are able to rapidly embrace this model and experiment with its possibilities will win higher CPMs, new ways to differentiate against the competition, and a more loyal audience.
About the Author
David A. Yovanno is the CEO of Gigya, Inc., a leading social optimization platform for online business. He can be reached on Twitter at @daveyovanno, or via e-mail: dave(at)gigya(dot)com.
Facebook has grown to be one of the largest social networking platforms. It would perhaps be justified to state that Facebook is not just a part of life, rather a way of life. Started off as a platform for youngsters and teenagers in 2004, mostly university students of the US, it has now emerged as a source of recreation for people of all ages and occupations.
With Facebook, a new era has begun for the world of advertising from a business and an organizational stand point. As consumers rush towards digitalizing their lives, organizations rush behind them to be at the exposure of their precious customers. Organizations increasingly are challenged to come up with new ways and techniques of reaching out to more properly defined target markets in a more effective way. With boom in advertising industry, organizations spend millions of dollars each year in order to get their message across. The advertising expense as of 2009 in UK alone was £14.5bn.
While, it presents healthy opportunities for these businesses to innovatively diverge their attention and expenses to this new platform, on the other hand it poses some serious threats too.
Among all other rationales, the biggest as to why organizations rely on Facebook is the high ‘Reach’ that this medium offers. As per Facebook’s own press release there are almost 500 Million active users of the website, 50% of which log on to the website at least once a day. For an organization such as Nestle’ it would mean; reaching out a much larger audience at a much lesser cost. As for Facebook; it earns most of its money from either advertising or selling out consumer data to organizations. People spend around 700 billion minutes on Facebook per month. They keep statuses, send messages, and join communities of their interest or in other words Facebook acts as their personal diary and a database of their mind. Using this database to the benefit of the organization is then the job of marketing personnel. The bottom line however is that reaching out to the brain and thought processes of consumers is a lot easier for organizations today, all thanks to Facebook.
Fan pages on Facebook are one of its most popular features and the only investment is ‘time’ of the person people refer to as the ‘administrator’. Businesses with no significant presence in practical field have used Facebook to build up their brands and create awareness. As a matter of fact, consumers are actually using Facebook to express themselves; it serves to the consumer end as a platform where they can directly convey their feedback or share their comments regarding a particular brand or product. This feedback obviously, serves back for the organization where they can do something to change the negative perceptions and reinforce the positive ones.
As a part of their integrated marketing communication practices, companies can benefit from Facebook by creating upcoming events. It is a good idea to use this channel to let the audience know of other marketing efforts a brand is making especially their interactive media contributions and their presence in various events.
Having established the fact that Facebook can really help businesses create awareness, build a strong brand image, directly communicate with their target market as well as getting consumer insights; On the other hand, the heavily increasing traffic on internet creates the kind of Clutter which was previously the nature of TVCs. Consumers are exposed to 5000 ads a day, as Walker Smith Claims. Getting through this clutter and being noticed by your audience is then the Job of the marketers.
Overall, Facebook can do wonders for organizations assuming that the organization has a plan and the will to make the effort. It is a cheaper, easier and a more direct channel of communication with prospective customers. ‘Pros and Cons’ is a universal truth, where something has its benefits it has some short comings too, the art however is to look up to the Cons as an opportunity, rather a threat and that is probably the difference between ‘ordinary’ and ‘extra-ordinary’ companies, that is what builds a ‘brand’ in the real sense of the word.
About the Author
Saman Tariq is a business graduate from FAST School of Business, with Marketing as her passion and field of interest. She, who spent her early childhood reading several novels and poems ended up writing some in her early teens and now has a passion to read, discuss and write on topics of marketing, social and organizational concerns.
BBC’s Maggie Shiels analyses how Facebook has ramped up competition competition with AOL, Yahoo, Microsoft and Google with Facebook Messages.
Facebook Messages aims to tie users more closely to the social networking site at a time when everyone is battling for their attention.
The product will merge texts, online chats, and emails into one central hub.
Facebook said traditional email is too slow and cumbersome and needs to step into the modern world of messaging.
“This is not an email killer,” Facebook co-founder Mark Zuckerberg told reporters and analysts at an event in San Francisco.
“Maybe we can help push the way people do messaging more towards this simple, real time, immediate personal experience. Email is still really important to a lot of people. We think this simple messaging is how people will shift their communication,” added Mr Zuckerberg.
In a case of bad timing, reports surfaced hours after the Facebook launch that Gmail suffered an outage.
The new service is seen as offering an alternative to Gmail, the fastest growing web service in the past year with over 193 million users according to data tracker ComScore.
Email remains one of the most popular means of communication
The irony was that ahead of the announcement, speculation was rife that Facebook’s new product would be most crippling for Gmail. Mr Zuckerberg said he did not see it that way.
“In reality they have a great product.
“We don’t expect anyone to wake up tomorrow and say ‘I’m going to shut down my Yahoo Mail or Gmail account’.
“Maybe one day, six months, a year, two years out people will start to say this is how the future should work,” said Mr Zuckerberg.
AOL which at the weekend previewed changes to its once popular web mail service disagreed email is doomed.
“Email remains one of the killer apps on the internet,” said Brad Garlinghouse, AOL’s senior vice president of consumer products.
Industry analyst Augie Ray of Forrester agreed.
“Research we have done shows we know that in the US 90% of adults check their mail at least once a month and 59% of adults say they maintain a profile on a social networking site.
“There is a big gap between the reach social media has and the reach email has.”
Ease of use
At the heart of Facebook Messages is an effort to ensure users “see the messages that matter”.
The new feature will simplify how people communicate whether it be via text, instant messages, online chat or email. All these messages will come into one feed known as a social inbox allowing users to reply in any way they want.
All 500million plus users will eventually be offered an @Facebook.com address
Facebook said around 70% of users regularly use it to send messages to friends and and that a total of four billion messages pass across the site every day.
“We really want to enable people to have conversations with the people they care about,” Facebook’s director of engineering Andrew “Boz” Bosworth told BBC News.
“It sounds so simple. We have all this technology that should be enabling that but it’s not. It’s fragmenting that. So I have one conversation on email with my grandfather and another with my cousin on sms and all these things don’t work the same way.
“I shouldn’t have to worry about the technology. I should just have to worry about the person and the message. Everything else is just getting in the way,” added Mr Bosworth.
The new system will be modelled more on chat than traditional email which means there will be no subject lines, cc or bcc fields.
Liz Gannes of technology blog AllThingsD said she believed users will have a bit of a learning curve on their hands.
“I think the product is just different enough from what people are used to that it will feel really weird to users for a while.
“The lack of subject lines will get people upset at first and then of course they will probably realise they never wanted them anyway.”
Other features include being able to store conversations so users can have a complete archive of communications with friends and family. Mr Bosworth likened this to a modern day treasure trove of letters stored in a box.
Incoming message will be placed in one of three folders – one for friends, another for things like bank statements and a junk folder for messages people do not want to see.
The product will also represent a challenge to Yahoo with over 273 million users and Microsoft which has nearly 362 million.
“For me today represents the day when Facebook truly becomes a portal on the level of Google, Yahoo, Microsoft and AOL,” Charlene Li social media analyst with the Altimeter Group told BBC News.
“They now have to start making their inboxes more social. Friends are the new priority as opposed to the conversation. This makes Facebook so much more functional.”
The new product will be introduced slowly over a number of months
Robert Scoble technology writer and founder of Scobleizer.com said this product gives everyone something to aim for.
“This is a new kind of communications system but its not game over for Yahoo and Gmail and all the others because it will take decades to get people to stop doing traditional emails.
“However this is something new and very powerful because Facebook can tap into my social graph and ensure that only my friends are there and I won’t get spammed.”
Facebook said this product was the biggest the social networking giant had worked on to date.
The company will also offer an @facebook.com email address to every one of its more than 500 million users.
check out what’s the first reaction of the analysts here.
In 1993, The New Yorker ran a famous cartoon with two dogs near a computer, with one mutt telling the other “On the Internet, nobody knows you are a dog.”
Oh, how times have changed.
In the Facebook internet, everyone knows exactly what breed of dog you are.
That was Facebook’s real trick — convincing the world to identify themselves online. They pulled that off by giving net users a place to share photos and pithy updates, when the real purpose of Facebook, it turns out, is to layer identity over the fabric of the web.
For years, Google’s natural enemies seemed to be Microsoft and Yahoo. But as the search giant trounced those giants in the search space battle, it’s been slowly losing momentum in what may turn out to be the real war — the one for the display ad revenues — to an unlikely foe: the dorm-room-born Facebook.
We’ve seen a public pissing fight this week over who owns social network contact information, but that’s just the start.
Today, Facebook is reportedly getting into Google’s e-mail face, mounting a challenge to Gmail, Google’s most successful social product. Users will reportedly get @facebook.com or fb.com e-mail addresses. But more importantly, Facebook already has ranking scores for every one of your relationships with contacts on Facebook and will use that to prioritize your inbox, according to the tech rumors.
That’s an important side battle, but it’s not where this war will be lost or won. That’s not where the money is.
Facebook, which began its life as a small private club for Ivy Leaguers, now has its sights set on what might be the net’s biggest pot of gold yet: a way of placing ads anywhere on the net with a granularity Google can only dream of — in no small part because Google promised its users never to go down that path.
And that’s why Google, the web’s most successful advertising company, sees Facebook, not Microsoft’s Bing, as its biggest rival.
Some tech pundits foresee a Facebook future where friend recommendations replace search, or Facebook gets enough data from what users like to make a more relevant search engine. That’s unlikely, for a number of reasons, including that Facebook profiles aren’t that detailed and that Google is already building social into search (look here if you are logged into a Google account to see a glimpse of what’s going on).
Instead, follow the money Facebook is making now. Depending on how much you have filled out your Facebook profile, you might have noticed that Facebook ads are sometimes eerily too good, as if Eminem’s music label actually knows what kind of music you like.
If you’ve had that sneaking feeling, then you know exactly why Google is trying to play social catch-up with Facebook, and how Facebook could single-handedly save the online publishing industry.
What gnaws at Google is not so much that Facebook users spend a lot of time on its competitor’s site. And it’s not even that Facebook gets so many page views that it now serves up an astounding 23% of the U.S.’s online display ads, according to a recent survey by comScore. That’s more than twice as many as Yahoo server and ten times as many as Google, though Facebook’s rates remain low.
Instead, the search giant is scared by two things it sees as possibly undermining its stature as the web’s top tech company.
One, there’s so much interaction and information being shared inside Facebook that it has become a decent-sized replica of the Web inside the Web. And Google can’t crawl and analyze much of what happens in there. That’s a problem when your goal is to organize the world’s information. Google is blind to this because much of what happens on Facebook remains in Facebook. (Ironically, this is due to users’ privacy settings, which Facebook has relentlessly tried to chip away at over the last four years.)
Two, Facebook knows who you are and has the right to use that information because you explicitly gave it to them. Google has different kinds of data that reveal a lot about who you are and what you are interested in — some of it very private. But very little of that data is information you explicitly told the company to share, and they’ve assiduously promised not to use your search history and e-mail data to profile you.
For years, that’s not been a problem for Google. They made the majority of their $7.29 billion in revenue in the third quarter from little text ads that show up next to and above search results.
Those adds are all keyed off the words you type into that little box. There’s no targeting involved. It doesn’t matter to Google’s AdWords system who you are, what you’ve searched for before, or what you do in other Google services (the only real targeting available in AdWords now is by location).
Google then expanded this program in 2003 to run ads on other people’s sites, its AdSense product, which now includes text and display ads. For years, those ads were also purely contextual, based mostly off the words on the site running the ads. So if you ran a blog about your life as a dentist, your readers would see ads for dental floss and teeth-whitening products.
But then, in search of a new revenue stream, Google bought DoubleClick in 2007 for more than $3.1 billion.
DoubleClick is one of the net’s display ad giants and has been serving banners ads on sites across the net since the early 1990s, using each ad serving spot as a way to track what you are reading to make inferences about your interests and build a pseudonymous profile of you tied to a cookie in your browser.
But despite having a large number of sites running the ads (including Wired.com), AdSense/Doubleclick ads still account for only 30 percent of Google’s revenues. And, surprisingly, the targeting isn’t very good. You can go here to see what Google thinks it can deduce about you just from your browsing.
The problem is that Google built a wall between user search data and advertising — and the mammoth financial success of AdWords proved that the separation was fine at the time. A search query was likely to show intent, and it really didn’t matter to advertisers selling something who the searcher was.
To make display ads better, Google kicked a hole in that wall in 2009 when it started including the videos you watch on YouTube as a way to target display ads ads at you.
Google isn’t talking about how well those ads perform compared to its purely contextual ones. But according to a Wall Street Journal story from this summer, Google is “soul-searching” over ways to turn what you do while logged into Google into data that can be used for targeting ads. That’s agonizing for Google since it’s always promised that it would keep that usage data separate from its ads.
But Facebook has never made that promise, and its users don’t seem turned off by the targeted ads.
They know they gave up the targeting data by typing it into their profile box, by becoming a fan of a company on Facebook or clicking a “Like” button. And now Facebook is training users to stay logged-in to Facebook all the time, for the convenience of logging in to sites or “liking” a story.
Why does that matter?
It matters because now you are your Facebook identity all over the net, telling every site that plays in the Facebook ecosystem exactly which dog you are, that you like playing fetch and what other dogs you run in a pack with.
Which means, it’s a virtual certainty that Facebook-targeted ads are going to start showing up in your hometown’s newspaper, your favorite online music site and hundreds of other sites you visit. And unlike the targeted third-party ad systems run by Microsoft, Google and others, there’s no need to track you around the net to try to infer from your reading and video viewing habits how old you are, where you went to college or what you are into.
As the underdog in this fight, Google’s best weapon will be openness — tying to turn users against the walls of Facebook, while Facebook will try to be just open enough to keep users and partners from revolting.
Facebook knows all of that already because you told them. Facebook touts the story of a wedding photographer in Michigan who’s expanded his business tremendously simply by targeting ads at locals who mark themselves as “engaged.” Gabriel Weinberg, the one-man show behind the search engine DuckDuckGo, went so far as to create an ad targeted just at his wife.
Now, Facebook advertisers don’t actually know anything about you — at least not until you click on an ad, visit their site and handover your e-mail address. Instead, they use a simple panel in Facebook that lets them choose what categories to target, including age, location, education and gender. They can further target ads based on the things you have liked or added to your profile. Facebook runs the ads on a company’s behalf but never turns over a list of who fits the targeting criteria to the advertisers.
As a private company, Facebook doesn’t have to share public numbers, but a spokesman told Wired.com that advertisers are getting comfortable with Facebook, and it has thousands of advertisers. Revenues are estimated at $1.3 billion a year and rising, while investors and secondary markets are valuing the company at more than $40 billion on Sharespost, a private stock market.
That despite the fact that Facebook founder Mark Zuckerberg has never loved ads. He kept them off his site as long as he could, and even the ones that run now are relatively small, given how big and loud ads have gotten on the Web outside of Facebook. Some marketers complain that the Facebook ads just aren’t visible enough on the site, so they concentrate their efforts on getting people to “fan” their pages, in hopes the news that you like “Starbucks” makes it into the news feeds of your friends.
Facebook says it’s not working on any third-party ad system, and right now, it doesn’t need to. It’s flush with cash from investors, who’ve poured hundreds of millions into the company, without Zuckerberg losing control. It can bide its time, making Facebook even more central to the internet, building more relationships with top advertisers and convincing more sites to turn over their login systems to Facebook.
But it’s a near inevitability Facebook takes the same, logical step Google took and starts putting ads on third-party sites, targeting Facebook users reading the Washington Post, The Daily Beast, or your hometown newspaper.
Those ads could be splashy and dominant – the way advertisers like them these days, without distracting from the Facebook experience. They can also be very targeted, without Facebook having to hand over the info about that reader to the website.
It has the potential to be the opposite of Google’s Adwords/Adsense division, with huge profits coming from outside the Facebook walls. Facebook could then grab a giant and dominating slice of an evergrowing online display ad market, while simultaneously making display ads actually targeted.
Facebook even makes the case that its ad system is less creepy than third-party systems that track you, mostly without you realizing it, around the web. While they do see what you are doing around the web when you are logged into your Facebook account and there is a “Like” button on that site, the company says it does not mine that information and deletes it after three months. No other third-party ad network comes close to forgetting so soon.
Facebook’s advantage is that they probably don’t need to do this sort of tracking, given all the profile data, friend connections and likes that you’ve fed into their system. If advertisers and users get comfortable enough with ads based off that data, then there’s no reason that a site such as the New York Times wouldn’t want to turn over at least some of their ad sales to Facebook. Having spent years getting advertisers used to targeting the Facebook generation, Facebook would be able to charge very high rates to advertisers.
That’s because it would not only be able to do very granular ad targeting, but it could do so on a site with the reputation of the New York Times.
Online papers love the idea of targeted ads, because contextual ads just don’t work for news. What ad are you going to put up next to a story about a flood in India? An ad for Indian rugs? What about next to a story about a plane crash? Or even a story about a run-of-the-mill mayoral election?
One hope to fix that giant problem facing the media industry is to know who your readers are.
And that means building identity into the internet.
Facebook’s the only company to have done so, and that’s why Google is fighting to catch up to “social.”
There may not be room for more than one online identity company on the net, but Google has assembled a high-powered team of coders and thinkers, including Slide’s Max Levchin, the open social evangelist Chris Messina and Plaxo’s Joseph Smarr, to take on the Facebook crew.
As the underdog in this fight, Google’s best weapon will be openness — tying to turn users against the walls of Facebook, while Facebook will try to be just open enough to keep users and partners from revolting. The best case scenario? Google figures out how to turn identity into an open protocol like e-mail — something you can host and control anywhere that lets you stitch together whatever services you like.
And if that effort fails, Facebook’s relatively benign child-king will be in control of what you can and can’t do with your identity on the internet.
And Mark Zuckerberg will have built a company worth more than $100 billion — and maybe worth more than Google.
Last week, on Mouse2House blog where I regularly contribute on Technology, I discussed how Facebook is going to kill Gmail and the dorm-room-born company might be the biggest enemy of Facebook. In this post Wired’s Ryan Singel analyzes how Facebook could beat Google to win the net.
Facebook advertising holds tremendous promise for marketers looking to reach targeted audiences online. Nowhere else do people willingly share such specific information about themselves – enabling marketers to target ads and evaluate performance based on details about consumers such as their age, interests, employers, location and even friends and relationships.
Facebook advertising, however, is still relatively new, and advertisers are only beginning to experiment with Facebook ads. Even digital marketing experts, familiar with advanced targeting techniques in paid search and display advertising, are just now figuring out how to effectively run advertising programs on Facebook.
To get your ads noticed by Facebook users, you’ll need to tailor your ads to work within the Facebook experience. Facebook users spend an inordinate amount of time –- more than any other website — on the social network. They interact with friends, share information and connect with their favorite causes; however, despite all their actions, people aren’t searching for products or services. That’s why carefully selecting images, modifying calls-to-action and subtly changing messaging to reach Facebook users is important for success in this channel.
Here are a few insider tricks you can use to take your Facebook targeting and ad performance to the next level.
1. Remember the User Experience
Many marketers dive right into Facebook ads expecting to drive traffic from Facebook directly to their site, just as in paid search. While this may work for some, tailoring the experience to Facebook users typically delivers better results. Using Custom Pages or Applications on Facebook to capture traffic allows you to keep users within Facebook for a consistent browsing experience, resulting in lower bounce rates. Custom Pages, as part of your Facebook Page, make it easy for consumers to “Like” your product or brand. For every user who Likes your page, you can remarket to them over time with status updates about deals or upcoming events.
Facebook Apps, on the other hand, provide the marketer with more control over the user experience, as well as the ability to gather detailed demographic data from user profiles. If converting traffic outside of Facebook is a requirement for you, consider tailoring your landing pages to social users. This could include writing different ad copy, the inclusion of Like and sharing buttons on your site and presenting user-generated content such as videos or reviews, as opposed to product information, for Facebook users arriving at your landing page.
2. Use Root Analysis to Expand Targeting
Facebook users can list any terms they want to define their likes and interests, so in order to target a full audience of potential customers, you may have to do some investigating for those terms and phrases that go beyond your general keyword search. For example, using the targeting parameter “camping,” your ad will not reach users who have listed “camping in the mountains” or “tent camping” on their profile.
Root analysis is a useful way to discover people’s likes and interests on Facebook to expand your audience and drive more conversions. Simply start with a root word and expand your targeting to include related interests. You can do this by typing the root word into Facebook’s “Likes & Interests” targeting settings and then typing a single letter to find related terms. Using the camping example, entering “camping i” results in a list that includes “camping in California” and “I love camping.” Adding these unique terms to your targeting criteria expands your audience, helping to discover additional valuable consumers and improve ROI.
3. Segment Your Ads
With 500 million users on Facebook, there are probably plenty of consumers that you want to reach with your ads. However, not all Facebook users are created equal. Breaking out your audiences to understand the value of each segment, and then adjusting your bids accordingly, will help you optimize your Facebook budget.
Dividing audiences by age, location, and gender should help you find the segments most likely to convert, making each segment more valuable to you. As you measure the performance variance between your segmented advertisements, you can adjust your bids to improve the overall ROI for your Facebook ad campaigns.
4. Prevent Ad Blindness
People use Facebook to interact with friends, share their photos and play games, not to look for products and services. Your ads need to grab their attention. Facebook users are inundated with content and typically scan images and text quickly, but there are tricks to modify creative to minimize ad blindness and increase click-through rates. The most successful ads include colorful, engaging images — and of course, a compelling and relevant offer. Adding borders to your photos in colors like orange or yellow, which contrast with the blue and white Facebook interface, is a simple way to pull the user’s eyes in your ad’s direction.
Make sure to test early and often here, as the results will surprise you. The most-clicked ads are not necessarily the most aesthetically pleasing; they are often the ones that stand out on the page. Also, because ads can be served to the same users multiple times, it doesn’t take long for users to completely tune out repeat ads, so you have to keep your approach creative and fresh. Rotating images and headline copy as performance drops over time can help boost click-through rates.
By using the tips above to target and optimize your advertisements, you should have a head start in Facebook marketing. More importantly, by building competencies in this new channel, you can build sustainable advantage over the competition through superior targeting and optimization.
Taking a wait-and-see approach may be the safe route, but now is the time to begin. The Facebook advertiser base is still relatively small in comparison to the Facebook audience. As a result, costs-per-click rates remain lower than paid search and other channels. As advertisers continue to shift dollars to Facebook, costs will rise, and advertisers that have managed to build a fan base early will be better positioned to reap dividends from their investment.
What tips can you offer? What has worked with your own advertising experience on Facebook? Do you also zone out uninspired ads? Let us know in the comments below.