An interesting piece by Bernard Lunn on Read Write Web recently. In part…
… the thought that kept coming back to me is that Facebook’s bravado, its “grand vision” talk, is what you would expect from a concept-level startup. Surely by now, about 6 years into its venture, Facebook should show some substance? It is time to deliver some real financial results. The concept-level talk is great for attracting capital and talent. Facebook has done that brilliantly. But the point of attracting capital and talent is to be able to generate financial results.
Anybody who criticizes Facebook’s financial results gets accused of being small-minded, of missing the point, of (gasp!) “not getting it.” In digerati circles, not getting it is like having body odor. Facebook is changing the world, they say. It is a new form of communication, akin to the printing press. Once you get to scale, profits always follow. Google created a service without knowing how to monetize it.
In fact, far too much money has been invested (in both Facebook and hundreds of “me too” ventures) based on that one premise, that “Google created a service without knowing how to monetize it.” The statement is true. If it had not devised the AdWords revenue model, Google would perhaps have sold some kind of enterprise search technology to Fortune 500 companies and rented banner ads on its home page. With AdWords, it found the perfect native revenue model for search, meeting two contradictory needs at the same time:
- Do not irritate or interrupt the user, and even occasionally add value for the user.
- Provide a compelling value proposition to paying customers.
The problem is that Facebook does not seem to have a clue how to do that. Google did not wait 6 years to unveil AdWords, and when it did unveil it, revenue and profit took off like a rocket. Facebook keeps trying. But to date, its attempts look weak and subject to diminishing returns.
There is a world of difference between increasing returns (what Google gets) and diminishing returns (what Facebook gets with its current strategy). That one-word difference equals billions of dollars.
… Facebook’s revolutionary alternative is to allow consumers to invite brands to communicate with them, like we used to invite companies to send us emails. That would get over-used and spammy in a heartbeat. Highly innovative brands would do well, as they always do in a new medium, but the law of diminishing returns would apply. By the time this model scaled, and it would have to if Facebook wants to move the revenue needle, users will have switched off in droves.
These are the diminishing returns. The more the model scales, the more it will irritate users, and the more users will switch off, and the sooner growth will slow down and reverse. As with email, Facebook can “make up for this with volume.” But unlike with email, which is virtually free, Facebook has to pay money to serve each user.
Sorry, “Coca-Cola wants to be your friend” is in no way an enduring revenue model. If it sounds phony, maybe that is because it is phony.
The one lesson from social media marketing is that authenticity matters. What no one has shown — and methinks this would be impossible — is how to scale authenticity.
This is where behavioral marketing supposedly comes in. Wired calls this the “third rail of Internet marketing.” … Or, as Wired puts it, “As the Beacon debacle showed, there is a fine line between ‘targeted and useful’ and ‘creepy and stalkerish’ — and so far, not enough advertisers have been willing to walk that line.”
Facebook talks a great game about helping the world to communicate. It tries to sound like a group of benevolent revolutionaries. But then it turns to really old-fashioned tools to make money. Its basic message to marketers seems to be, “We have ’em locked in. Yep, Google can’t see them, so we are the only way to get to them. And not only that, we can tell you what every one of them is doing and saying right now. Step right up, folks!”
The one thing that Facebook has on its side is trust. Users trust the company with their real identities. That is massive. Break that trust and bye-bye.
Pew keeps cranking out the internet data. A recent report shows…
Of those online…
So, if I understand the data, Pew is saying that 26% of the 74% of American adults online participate in online auctions… that’s 19% of all American adults. So, here’s the list for all American adults (not just those online)…
Front Porch Forum aims to have as many residents of a neighborhood as possible subscribe and participate on the associated FPF neighborhood forum. In a sense, we host non-stop online block parties… and the more the merrier, as long as they live in the neighborhood.
Because FPF is an online service, we’re already limited, on average, to just 74% of the adult population. If we had selected a platform/distribution channel such as a Facebook application or instant messaging or Twitter… well, we’d only be able to get, at best, about one quarter of the neighbors on board. Of course, these numbers will change over time.
So, for now, we use email newsletters and a web-based archiving system. This allows us to reach, on average, 67% of the adults in each neighborhood. In our pilot region, more than 20% subscribe, with 40% on board in the City of Burlington. We’d never have been that successful if we had limited ourselves by going with one of these other, sexier platforms.
I, apparently, don’t get out much. This holiday season I’ve found myself in places I rarely visit… suburban America, shopping centers, traffic, food courts, gyms with equipment lifted from the Star Ship Enterprise, watching relations spend a good chunk of “family visiting time” instead stroking their electronic tethers… it’s a shock to the system. I feel like a foreigner in my own culture. What’s become of walks in the woods, caroling, writing and receiving Christmas cards, baking simple hand-me-down recipes?
I was caught staring many times… oh, I’m afraid to say more right now. I’ll let Scott Heiferman, quoting Rev. Billy, do it for me…
Rev Billy: … a good New Year’s Resolution would be to be able to shout the truth, and then to be able to hear such a crying out from others, too. We have to hear the cry from within ourselves as well as hear it from an orator in public space. I believe that the criers are out there, but we are so dulled down, emptied, hurried, shell-shocked by advertising, iPodding, Facebooking, sitting in traffic, waiting in line… all we do every day to pursue Consumerism… If we remain consumers, fans, tourists, demographic groups, investors – and not sensual citizens, we will never make our way back… And we will die or we will live – it is our choice. If we die, we might die standing up with our eyes open, buying something we don’t need with money we don’t have. That is modern Hell.
Right now, in 2009, we have an opportunity to defend ourselves against those who find every detail of our lives a potential profit center. The corporations have stumbled, they are smashed on their own greed. We have a unique window of opportunity – maybe have a few weeks or months in 2009 – in which to cry out. All the fake happiness and sorry of advertising is less powerful now. Remember how the supermodels and giant celebrity heads on the cityscape seemed to shrink down after the world trade towers crashed? They were suddenly so ridiculous. The spell of Consumerism was broken for a time. Now it’s happened again. And what are we doing? We are trying to clear our heads. We get up on one elbow. We know what we must do. We need to slip to dance, hear the music, and hold hands. This year, we pledge to find the power again by being human.”
Amen to this. From Kara Swisher at Wall Street Journal’s All Things Digital…
I conducted a little experiment among the more than 100 folks gathered for the wedding, all of whom were quite intelligent, armed with all kinds of the latest devices (many, many people had iPhones, for example) and not sluggish about technology.
They were also made up of a wide range of ages and genders, from kids to seniors.
And so I asked a large group of people–about 30–and here is the grand total who knew what Twitter was: 0
FriendFeed: 0
Widget: 1 (but she thought it was one of the units used in a business class study).
Facebook: Everyone I asked knew about it and about half had an account, although different people used it differently.
In other words, confirming for me what I wrote last week about the intense obsession with the hottest new services like Twitter and FriendFeed, in the echo chamber of Silicon Valley, and how no one else cares yet.
And from MeetUp.com‘s Scott Heiferman…
Making a householdword is the great challenge. Not only does the word need to be universally known, but it has to be universally known for something that people need. eBay, Amazon, Google, and Craigslist are universally known, and people need what those words mean: People need to buy & sell & search in their everyday lives… As for Facebook, people need to stay in touch with people they know, so they’re on-track, but I suspect their word is too muddied with pokes & kid stuff.
About 30% of our pilot city subscribe to Front Porch Forum and many more than that have heard of and/or plan to sign up for our service. Many people appreciate help in connecting with their neighbors and plugging into their neighborhood.
Cameron Marlow, research scientist at Facebook, argues today against Robert Putnam’s Bowling Alone thesis and the notion that more time spent commuting reduces a person’s social life. I think Cameron is suggesting that the more one commutes, the more time a person can spend on Facebook… and therefore said lucky soul will have a richer social life.
Perhaps I missed his point. It may be an MIT vs. Harvard thing. I don’t agree with all of Putnam’s conclusions, but I don’t doubt his data and the core of his analysis… Americans are less connected to the community where they live than they have in the past and this is not a good thing. I know that millions of kids (teens and 20s) and people in the tech industry use Facebook… but I just don’t see that as a replacement for a nation full of people richly engaged in local clubs, schools, churches, municipal government, civic organizations, sports, elections, charities, arts, etc.
Facebook is a game and local engagement is about building up the community in which you live. Apples and oranges.
“Facebook is just a game. That’s it, that’s all.” So says Sebastien Provencher. Thank goodness for the holidays and their tendency to break people out of their ruts and send them back home for a bit of grounding…
During the Holidays, I met with my friends and family multiple times and one topic of conversation that came up very often was Facebook. “What’s Facebook?” my mom would ask. “Why are people so fascinated with it” my brother-in-law would add. “It’s useless” or “it’s a waste of time” would also come up very often. The proof of the whole uselessness was the “poking” and the “sending my friends a virtual beer” examples. I tried explaining Facebook the way I’ve explained it many times in this blog but I quickly realized I was getting nowhere. My friends and family members that thought Facebook was useless wouldn’t change opinion even after I explained my big social media theories.
PreFacebook Life of a Techie
Yea these many years ago, I was a kid playing Pong on my family’s vintage black and white TV… I could and did play that thing all day (was it an Odyssey? I think it came from Sears). Then it was Atari… in color! Space Invaders, then Atroids, PacMan and beyond. And I owned a few of the first handheld “videogames”… football and car racing come to mind.
In college, I dragged along my old Atari into the dorm, risking and receiving a bit of ridicule, but soon enough we were engage in epic tournaments of some four player “breakout” type game where each guy tried to protect his king in his castle of bricks… alliances made around the beanbag chair on the shag carpet… daggers plunged into backs… great fun.
Then it was on to music… collecting other people’s music. My chosen low-budget approach was making audio tapes from borrowed or rented albums and recording off the radio (the college station played complete albums)… later CDs.
I was the first person I knew to buy a PDA… a Casio with a full keyboard… oh man I loved that thing. A buddy and I used its built-in spreadsheet software to track a cross-country road trip, among many other uses.
Sometime after grad school, I landed a job that included broadband access at my desk… wow! The web didn’t have much to offer yet, but email was incredible. I corresponded with every old friend and family member I could find that used email (and didn’t try to keep in touch with those who weren’t online).
While I typically worked conscientiously at this job, now I had a growing set of diversions at my fingertips… (1) computer games mysteriously living on my hard drive, (2) music I could play on my CD drive and research on the web, (3) contacts and calendar I could manage on my PDA, and (4) friends and family whom I could email. It’s a miracle that I accomplished as much as I did at that position.
Entertainment’s Place
Which brings me back to Sebastien’s point above about Facebook. I have a Facebook account and I’ve nosed around repeatedly… but for the life of me, I have no interest. Am I the only one not on board? Sometimes I think so… but then I have a moment like Sebastien’s homecoming and I realize that MOST people are not on or deeply into Facebook.
And when I look at my life now… it’s very different than when I was a teenager or in my 20s and spent a large amount of time on entertainment… games, music, socializing. Now, as a husband, father of young kids, son of aging parents, active member of my community (i.e., the place where I live my “first life”), and business owner… well, I’m in a very different place. I’m blessed that my “entertainment” is woven into the daily fabric of a rich and mostly balanced life… very different than emailing distant and fading old friends from a lonely cubicle.
Facebook offers next to nothing for me now. From age 13 to 33 I would have been all over it. But I don’t long for any online tools at this point. In fact, I want to spend less time interacting with and through technology and more with kids, neighbors, extended family and other people in my life. Front Porch Forum evolved out of this situation.
Follow the Kids, Dummy
One last point, many voices can be heard saying we should bow down to Facebook and other services that cater to youth… because obviously that’s the way of the future. Follow the children!
Hmm. I know lots of kids, teenagers and people in their 20s. Lots of wonderful young folks. They bring much to the discussion… but I’m not ready to abdicate my responsibility as an adult, parent and community leader in order to follow the lead of a gang of 17 year olds.
What a loss for all involved if my father had chucked what he was all about and spent his time with me playing Atari, collecting bootlegged Bruce Springsteen and Replacement albums, and trying to keep the connection alive to that guy named Bill from bio class years after we parted ways. No, he was busy doing real things of consequence with real people in real time and space.
And he (and other adults in my life) got me outside, involved in my community, working, to the family dinner table, etc. He didn’t forbid me my “screen time”… but he saw it as play time… not as the guiding principal around which his generation should mold our society.
A New Entertainment Industry Born
Hollywood, pop music, video games… all established entertainment industries. And now Facebook and others have created an industry out of a collection of things we’ve always done (social networking)… souped it all up considerably. I’m interested to see where this all goes, but not keen to jump in or give it too much weight. More and more Americans seem to be spending more and more time, money and emotional energy on entertainment… reminds me of what I recall learning of the latter days of another empire.
Ghost of Midnight is an online journal about fostering community within neighborhoods, with a special focus on Front Porch Forum (FPF). My wife, Valerie, and I founded FPF in 2006... read more