Information Technology Strategy: Class 4 – Facebook will own the universe!

Last night we talked about the monster that is Facebook. Monster you ask? Y E S. Facebook could own the Internet or better yet; become the Internet. But more on that in a little.

We started out by watching the Facebook in real life video. This video puts, what is now accepted as online behavior, in an interesting light. It’s also really funny.

From there we talked about how Facebook fits into the online/technology landscape.

• Google – Google is a web business. That sounds funny but that’s what they are. They sell a ton of search-based ads via  . . . you guessed it; the web.
• Apple – This business is an electronics company. They create beautifully designed hardware/software and generate a lot of revenue. They also sell applications from within their walled garden.
• Twitter – Twitter is a social network for some a news resource for most. When something happens; you’ll hear about it first on Twitter.
• Facebook – FB is a social network. The biggest social network in the world and also a walled garden. (They’ve recently shared their internal content with Google via results but as soon as Rockmelt is done (more on that later) look for that deal to go away.

We then covered the staggering numbers that Facebook commands and then the many faces of Facebook.

• 10% of ALL Internet traffic is going to Facebook. People spend their entire day online, on FB!
• ~$800 million in revenue
• 450 million Facebook users
• 110 million mobile Facebook users
• Facebook is bigger than Google!

. . . and now for the faces

• iPhone App – Not sure how many have been downloaded but the last number I found was 1.5 million as of July 2009.
• Mobile Site – Compete.com shows the mobile site as having an average of 1 million unique visitors per month over the last year.
• 0.facebook.com – This is a recent offering from Facebook that allows people in other countries to access Facebook via their mobile device without being charged. The list of carriers that support this and other details are here.
• Facebook Lite (now DOA)
• Mark Zuckerberg – If you don’t know who this guy is, click on his name at the beginning of this sentence.
• Sheryl Sandberg – In my humble opinion (and most likely Facebook’s CEO as well), this woman is responsible for Google’s success and will also be responsible for Facebook’s success. She grew Google’s ad team from 4 to over 4000. Never underestimate how growth can kill a business. She’s a master at scaling.

From there we covered how Facebook makes money and how they’ll make money in the future. Today Facebook make’s money primarily through advertising  in the traditional online sense. They also offer social advertising and companies like Lotame utilize influencer marketing on Facebook to help promote things those influencers are most passionate about with their followers becoming informed along the way.  In the future their revenue base will much more diverse and potentially very very deep.

• Advertising that doesn’t suck – Traditional advertising sucks. It’s random and usually not engaging. If Facebook knows who you are and what your preferences are (and your friends preferences) advertising could get much more focused on you.
• Search Ads – Facebook has stepped out of its walled garden with Facebook Connect and more recently the ‘Like‘ button. This like button is allowing Facebook to create user generated pagerank that will allow them to sell search based ads on Rockmelt (getting there).
• Virtual Goods – Farmville. 85 million people CAN be wrong but they’re paying for those virtual cows and virtual goods are going to become a tremendous source of revenue.
• 3rd Party eCommerce – Just as you can log in to a site using your Facebook login; you’ll be able to purchase books on Amazon using your Facebook account.
• Local Coupons – Facebook is releasing check-in functionality “soon” and they’ll have an idea of where/when you go. This will enable them to provide you with coupons for offers specific to your online preferences AND your foot traffic.
• Brand Advertising off of Facebook – When you log in to a site using your Facebook credentials, they know who you are and can serve ads based on their knowledge of you. The ad rates for targeted advertising can be as high as 4x the standard CPM amount.

Note: The source for this list is here.

We then reviewed the primary method for businesses building their brand on Facebook; the fan page. (Some good numbers here.)

• Top ten brands
• 77% have less than a 1000 fans because they update content on average, every 16 days.
• What NOT to do by Nestlé – The important point here is that you don’t own the community you help create. The users do.
• Metrics – Tried to show the class some analytics from a friend of mine and could not find the link once logged in. Not sure if its usability or me.
• Best Practices – The best practices of Facebook fan pages are the almost identical to those for blogs.
• Twitter Users may not be Facebook fans – People join social networks and communicate based on their personal style. Don’t assume everyone is on both.

Okay . . . Now for Rockmelt. I’ve covered the melt before and it’s believed to be a Facebook specific search engine. If this is true, Facebook will own social search and therefore search-based advertising (just like Google), your preferences, your friends preferences and knowledge of when and where you go. They will ostensibly know all that they need to know about you to sell you personalized virtual goods, serve you personalized ads. (They also could potentially own mobile advertising which Apple and Google are currently fighting for.) Facebook isn’t going to stay in it’s garden and companies like Google had better watch out. Companies who provide ecommerce solutions better watch out. Google and Apple, who want to own mobile advertising dollars better watch out. Imagine a rabid space octopus, that hasn’t eaten in a week, climbing out of its hiding place in search of food.

RRRRRRRUUUUUUUUUUUNNNNNNNNNNNNNNNNNNNN!!!!!!!!!!!!!!!!!!!!!!!