What’s Facebook Going to Do with All That Money?


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Many of us grew up with Marcia, Marcia, Marcia. For the past few years the refrain has been Google, Google, Google. But this past week, it’s been all Facebook, all the time.

As we wait for the biggest IPO in tech history to shake out, the question I’m being asked most by clients and especially the mainstream media is, by far, “what’s Facebook going to do with all that money?”

I’d love it if “One Buck Zuck” would send me a check. Barring that, some reasonable conjectures can be drawn.

1). Mobile Facebook’s S-1 filing contained all the usual risk disclaimers: changing market conditions, loss of key executives, that stuff. But there was one zinger in the boilerplate – Facebook’s statement that mobile is growing fast, and that the company can’t yet monetize it. It’s not too much of a leap from there to the conclusion that multiple millions of dollars can be applied to figuring this one out. An article published the day after the filing suggests we’ll see the first Facebook mobile ads in March. Yet mobile means different things to different users, fast as the channel is growing. Smartphones, tablets…when it comes to mobile advertising, Facebook will require more than one solution. And that’s to say nothing of Facebook Credits and other commerce opportunities on mobile platforms. There’s plenty of R&D opportunity for Facebook across the mobile spectrum.

2). Data Data is Facebook’s core product. Not only do they have more of it every day on their users, that data is getting increasingly complex. In addition to basic demographic data, there’s friends and friends-of-friends. Groups they’re a part of, companies worked at, Likes, and soon, Actions, what they’re reading, listening to, eating and buying are only the beginning. Managing this data, parsing it, and making it useful and actionable to advertisers and marketers in ways that can help increase user engagement, create newer and more premium advertising products, extract deeper meaning and clarity from stores of data so complex it very nearly qualifies as big data is challenging, to say the least. It’s also critical to Facebook’s future. Data is what Facebook sells.

3). Platform What’s next for Facebook’s platform? It’s currently central to a vital Facebook economy. Without that platform, companies ranging from Zynga to Buddy Media would hardly exist as we know them today. Media companies from the Wall Street Journal to Spotfiy wouldn’t be able to reach and interact with Facebook users. It’s critical to keep that platform open and to continually expand upon its scope. Is social commerce the next comer? Features that link Facebook more deeply into the real world? Without the platform, Facebook doesn’t have the data, so watch for new developments in this arena, too.

4). Acquisitions Remember when Google was just a search engine? That was years ago, before YouTube, Blogger, Analytics and a host of other features that now seem integral to the company, but once upon a time were acquisitions. Google has largely become a roll-up, and Facebook could begin to follow that path as well (maybe by buying a search engine and finally incorporating real search into its platform?). Sure, Facebook’s made some small acquisitions in the past, but these are broadly viewed as more a bid to acquire talent, not technology. With a mind-boggling bank balance, that may well change.

5). Talent Silicon Valley engineers are high in demand, and you have to find a way to bring them to your company. In Facebook’s case, it’s not longer possible to do this with the lure of pre-IPO stock options. Facebook will soon be forced to pay a premium for new talent, particularly as some of an estimated 500 to 1,000 newly minted millionaires cash out. Sure, some will buy houses and cars. But others will yearn to get back to start-up culture. They’ll start new ventures, or even finance them. Facebook will pay more for talent in the long run, but their IPO will help to spark Silicon Valley’s economy, and that can only mean good things for innovation.

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Is There a Digital 180 Degree Law?

180 degreesEverything old is new again. Apparently this holds true nowhere more so than in digital channels. When there are major, disruptive shifts in digital, the needle doesn’t just move. It moves straight across to the opposite pole, 180 degrees.

Why does this matter? It’s something digital strategists, marketers, advertisers, media companies and others must take into consideration as they look toward the horizon to plan and strategize. They must realize that in the future things will not only be different than they are now. They could well be the opposite of what they are now.

Following, three examples of the digital 180 degree rule.

Distributed to central to distributed Remember what started the internet revolution? It was the shift from network computing to desktop PC’s, from distributed to central computing. It freed users from dependency on a server – everything they needed was right on the desktop hard drive. The past five or so years have turned that advance on its ear. Computing is distributed again. We live in the cloud and rely on mobile devices as much (often more) than our laptops. As for the PC, it’s becoming something of a relic. The return to distributed computing changes everything about how and where users interact with digital channels.

Walled garden to open internet to walled (well, solidly fenced) garden In the beginning there was Mosaic and the BBS. Not a lot of people were there. The internet began to achieve mainstream popularity when AOL (together with competitors such as Prodigy and CompuServe) inundated consumers with diskettes that, once installed on a PC, promised a graphical online browsing experience, provided you didn’t stray from the parameters of your content provider/ISP. As the “real” internet developed (and broadband proliferated), users ventured beyond these walled gardens into a brave new world. We’re beginning to witness an attempt by some of the major digital players to, if not confine users to a content-rich garden, then to at least make it more compelling for them to stay longer, and stray less often. Spearheading this trend is Facebook, working hard to become a one-stop destination for all the news, media, music, streaming video, communications, photos, games, apps and etc. you’d ever need. Why go anywhere else? This trend may not go a complete 180, but it will be interesting to see how Facebook, and perhaps Google, influence (or hog) traffic as each strives to become a one-stop destination for almost all your internet needs.

Distraction from mainstream media to probable primary media  access point. Remember when the web was going to obliterate newspapers, magazines, books, music and pretty much every other form of traditional media? It didn’t (and it won’t). The 180 degree shift we’re in the process of witnessing is the migration of all forms of media consumption to digital channels. Ebooks now outsell hardcover and paperback editions – combined (while ereaders are plummeting in price). Moreover, books are subsidized by advertising on some versions of the Kindle. As consumers cut the cord, TV viewing is migrating to digital, too. New platforms such as GetGlue and Miso make watching TV social, wrapping it up with promotions from retailers and media properties alike. The New York Times has more Twitter followers than print subscribers. Spotify delivers almost all the music in the world – free – if you share what you’re listening to with your Facebook friends. DIgital isn’t eradicating traditional media. Instead, it’s turned distribution, consumption and monetization models upside-down.

In which area will we witness the next digital pole shift? Hypothesize in the comments, please.

All images licensed under Creative Commons

Walled Garden photo – mguhlin.wikispaces.com  Newsstand: Joe Mabel

 

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Facebook: Socialize Media to Target Ads

In the Q&A following Mark Zuckerberg’s F8 keynote today, he was asked how brand advertising will change. His reply? Ads are becoming more social.

Sure, Facebook will still feature display ads on its pages. Stay tuned for açai berry diets and special deals on tooth-whitening for alums of [fill-in-your-alma-mater].

But the apps featured today at F8 are media apps, offering Facebook users (billions of them) new ways to consume content: music, movies, news and books, without leaving the confines of Facebook.  Spotfiy, Hulu, Netflix, Yahoo and the Washington Post are some of the first to offer content within apps within Facebook.

Some initial thoughts.

Discovery & Curation: More media will be consumed on and within Facebook (inevitable, given the size of its user base). At present, Facebook is the fourth-largest referrer to content sites, according to a recent Outbrain study. As more content purveyors offer more app-based content within Facebook itself, that balance could well shift. Publishers will have to consider enclosing their content within Facebook apps to promote discovery and sharing, or risk losing traffic and eyeballs.

New Value Exchange: The traditional media value exchange has always been that users spend a portion of the time they spend consuming content being exposed to advertising. Currently, the WaPo Facebook app displays no ads (this could well change). Instead, if a user clicks an article, they spread it. Their friends are notified that they’re reading such-and-such, encouraging more discovery and click through.

Users will be targeted by advertisers based on what they listened to, watched or read. Sure, a concert promoter can try to sell you tickets to Lady Gaga, if that’s what you’re into. But it goes deeper than that. In a conversation a couple of years ago with Spotify founder Daniel Ek, he confirmed the assumption that it probably (for example) makes more sense to market black leather jackets to heavy metal fans than try to sell them yogurt drinks. You get the idea.

Changing Media Consumption Patterns: With Facebook’s ginormous user base, it’s going to be interesting to see how content consumption patterns shift. Apps are becoming sophisticated; they “learn” what individual users like and display content accordingly. Friends and connections become one anothers’ content curators. Will users become overwhelmed by the flow, or embrace purportedly more targeted content? Will this accelerate or put the brakes on a growing degree of social media fatigue?

Only time will tell.

Content/App Marketing: These days, brands are as much publishers as publishers are. Expect them (particularly lifestyle brands) to jump into the content creation business with both feet. Not that they haven’t already, but apps will now become an urgently compelling channel for branded and utility content.

Facebook is saying they have no plans for an app store at present. They’re trusting users to recommend apps to one another. As advertisers get into the game, they’ll likely push to change this rather than rely exclusively on word-of-mouth. Expect display campaigns to feature get-the-app calls to action, too.

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