From a Business Perspective I Think Facebook is Interesting Because…
Facebook’s stock price seems to be the story of the day for the tech world today. Henry Blodget has a story titled “Well, Now That Everyone Has Sobered Up, Let’s Figure Out What Facebook Is Actually Worth…” As far as Facebook’s stock price goes I’m not even going to begin to speculate — but I will share some things that I think are interesting to me from a business perspective.
It feels to me like Facebook is starting to heavily push the whole “liking” commercial businesses thing. I noticed this a few weeks back when my friend Robert Scoble seemed to be liking everything under the sun on Facebook. Scoble’s usually on the cutting edge and out way ahead of the mass market on this stuff, but the best I can figure it out the deal goes something like this.
Only a percentage of your friends see some of what you post on Facebook on any given day. By liking products, a link to your Facebook page is included with advertising on Facebook. The more things you like (that potentially advertise) the more your profile is promoted in advertisements by Facebook. Even if people don’t click on the advertisement, they just might click on your icon to get to your page. The more you like, the more exposure you get on Facebook. Most people want their friends to see more of what they are doing because most people like attention. Facebook provides you more attention the more things that you like — a fair trade.
Of course you won’t like dumb things, because what you like is reflective of who you are. If all your friends hate Walmart and think it’s uncool, you probably won’t like their page necessarily — but you probably will like cool restaurants that you like, or clothes, or food stuff, or services, or whatever.
Now there are two ways that I think all of this liking business could be very, very valuable for Facebook. The first one is by Facebook selling analytics to advertisers on who likes what. Klout (who everybody seems to hate but everybody seems to have an account) is building their entire business, it seems, on giving people a score on how influential they are that marketers can use.
Facebook could be able to do one better. Imagine if the 26 million people+ who currently like Oreo Cookies on Facebook could be analyzed. If you were Nabisco and you could get the list of the top 5,000 people ranked by followers on Facebook who already “like” Oreo Cookies, how valuable would that list be for promotional value?
Let’s say all 5,000 of these people had thousands of followers each and Oreo was going to launch a new mint cookie. What if there was an option (or default) on Facebook that said, hey, let cool companies that I like give me free stuff ok? And now what if Oreo could send these 5,000 people all a coupon for a free package of a new mint Oreo cookie they were launching at their supermarket, or two free packages, or a free package in the mail with an Oreo tshirt — whatever.
Now, what if a percentage of these 5,000 influencers then took to Facebook, Twitter, Google+, Flickr, their mommy blogs, etc. and talked up this new mint cookie. An advertisement is worth something, but a personal word of mouth type endorsement from all these people wouldn’t be a paid advertisement. It would be word of mouth type stuff — so much more valuable and effective than a mere advertisement. Many people say they never click on advertisements. Maybe this is true, but we know that SOMEBODY is doing all that clicking. How much more enticing would an actual legitimate post about a company’s product be though? What if Oreo could even incent influencers to spread the word, more.
“Reshare this post about us and we’ll send you a second or third free package of our delicious new mint cookie.” Facebook could provide Nabisco with a highly targeted list of the most influential people in the world WHO ALREADY LIKE THEIR PRODUCT! That’s the key. People don’t want to endorse crap that they don’t like or use. But they love talking up stuff they like natural.
I LOVE those sea salt and vinegar chips. You know the ones. In the dark blue bag. OMG they are the BEST! So addictive. Oh yeah, they are called Kettle. Would I take a photo of a bag of those chips if they sent me a free box of them. Probably.
That seems like pure gold to me.
But what about the privacy problem?
Privacy Schmivacy. Privacy concerns are for “old” people. (I’m just exaggerating here to make a point, if you are a privacy zealot please, please don’t hate on me). Besides who cares if a company knows you like their product. Do you really care if people know you like Oreo cookies? It’s not like you’re liking sex toys or something (well maybe *some* of you are).
The point is that if you are willing to publicly or to your friends say you like a product on Facebook, it’s probably not something that you are ashamed of and heck, if you can get free stuff from companies that you like, why the hell not opt in, everybody likes free stuff right?
What would this sort of detailed reporting be worth to a marketing director for a consumer products company? I don’t know. You tell me. This article says Kim Kardashian gets paid $10,000 a tweet. Instead of paying Kim $10,000, what if you could just give 5,000 of the next level of influencers down beneath Kim a free $2 package of cookies or Pop Chips or whatever? What if you could give the 100 people after Kim each a $100 pair of Nikes when they already like Nike shoes? Would you want 100 influential people facebooking/tweeting/walking around town talking about the cool new pair of shoes Nike gave them? They pay athletes to wear them, why not see if you can’t scale that sort of thing?
Everybody with any sort of influence is mostly on Facebook already. Facebook wants the world to be a more connected place. Why not connect products with the people who like them and will endorse them? Who is working with endorsement marketing for the levels below the celebrities? Is there a huge business opportunity here? I think there might be.
Another interesting idea for Facebook — I think by having your friends’ avatar on company pages in advertisements it probably increases the effectiveness of these ads for marketers — but what if you could take this further? What if Facebook actually allowed you to personally endorse products in your own words.
I love Blurb books and SmugMug photo sharing. I think they are great [and they both sponsor my show which is on Wednesday nights at 8Pm PST ] What if I could complete a two sentence thing that said something like “Blurb books are the best, I’ve published 10 books through them and they are my favorite on demand book publisher,” or “SmugMug is awesome, they give 85% of photo sales markups to photographers, A+”
Now what if that testimonial could accompany an advert to all my friends and followers? Would that be a more valuable advertisement? I bet click through rates would go through the roof if they did that. What if Facebook actually turned this sort of thing into an affiliate program that you could sign up for and shared some of the advertising money with you (you mean you could actually get PAID to be on Facebook?)? Advertisers could buy a regular ad, or pay a lot more for a hyper effective friends testimonial ad.
Now how much revenue/earnings does Facebook make today? Who knows. Who cares. The point is that there are new creative ways that they just might be able to completely redefine advertising using highly personal and targeted tactics. One thing they do have today (and probably for a while going forward) is the audience. Will they do stuff like this? I don’t know, but I think they could if they wanted/needed to. I think Facebook could do alot of things if they needed or wanted to. I think the money flow stuff can be turned on and off at will almost.
Facebook doesn’t strike me as being entirely concerned about the money side of things though and I think this is a good thing. Some of the Wall Street types gave Zuckerberg a hard time about not wearing a suit to the IPO roadshow. I thought it was brillant that he didn’t. I loved that he didn’t wear a suit to the IPO roadshow but did wear a suit to his wedding this last weekend. I think there’s a subtle statement in there somewhere.
I think Facebook is going to be just fine on the money side of things. I think they are doing about what they should be doing and should just continue focusing on making cool stuff (especially for photos). Forget about the stock price distraction. Instead just stay focused and keep shipping.