We come to the end of 2007, well almost, having covered many of the International stories of the dot com World. For many in the dot com World, the year was dominated by mostly one story – the huge amount that Microsoft paid for a miniscule stake in Facebook. At The Constant Observer, we covered it extensively as well. We dealt with why Microsoft may have paid such a sum and also how Facebook is trying to be worth its while. There were many stores like the Facebook Beacon story (where a girl got to know that her boyfriend had purchased an engagement ring from Overstock.com before he even proposed – through Facebook!), which we stayed away from simply because they probably aren’t as relevant for our Constant Observers. That’s another thing we try really hard to do – make stories relevant to you, and we will strive to better that in 2008! Well Facebook is not the only website to look out for internationally in 2008 – there are a host of them. Here they are (and also why they deserve to be looked at!): 1) Facebook: Wrote about this above but the most exciting thing happening at Facebook is Social Ads. Placing ads in a social context, where people get associated with products. Also ads are finding their way into people’s ‘NewsFeeds’ – that’s another way of making brands ‘social’. This makes their purchase about 3 – 5 times more likely according to a study by Wharton Business School. 2) Etsy.com – A place to “buy and sell all things handmade”. Amazon revolutionized online commerce and ebay revolutionized 2nd hand e – commerce, Etsy hopes to tap into the trend of buying and selling handicrafts. This can have huge impact on the Indian Cottage Industries as well, expect a lot of Indian Internet Brokers in this space who will try and make a quick buck. Also expect a few “do gooders” who will try and give our cottage industry their due. It’s ironic that there is a mass medium for products that are supposed to be ‘niche’. That could be the only shortfall. 3) MicroBlogging Websites Pownce and Twitter – The idea is this: text large groups simultaneously. Its similar to the “status update” on Facebook, only on a larger platform. For Twitter atleast, the messages are limited to just 140 characters and thus it is labeled as “micro”blogging. Pownce too has a message limit. Messages can be sent from phones, the Internet or IM’s. Expect a lot of conversations to happen in this space. 4) Seesmic.com – Youtube is now a place for a lot of porn, spoofs, professional marketing videos etc. Seesmic.com hopes to recreate YouTube from its roots and in a sense recapture the sense of spirit of what YouTube originally was. It is for people who want to put video diaries on the Internet. Hopefully Seesmic will become the home for a generation of opinionated, thrill and attention seeking web surfers. P.S. We have such a guy at WAT – Aamer, our WATShow host would love Seesmic. The challenge: How to stop it from going the YouTube way? 5) Dooplr.com – A site for frequent travelers – the site tracks where friends and colleagues are and enables them to meet up at unexpected places. The trend I see is micro social networking. Watch out for a lot of micro social networks. 6) Instructables – Another Micro social network which helps innovators and individuals can "share what they do and how they do it, and learn from and collaborate with others." Essentially, Instructables offers a forum where users can sign up for free and post instructions using words and pictures to describe the creation of just about anything. Instructable subjects range from art to cooking to technology to the well-named category "not liable." Users can post comments or opinions regarding different Instructables, which creates a forum for discourse and creativity amongst individuals interested in particular how-to projects. 7) Google Knol – A Wikipedia copy – the only difference is that content is created by “experts” in a subject. Will be monetized. Not a brilliant idea but has the backing of Google so it has to be put on this list! 8) Mozy.com – This wins my vote for ‘Most Useful’ – you can back up 2 GB worth of data for free. For unlimited amounts, the charge is $5 per month, which is pretty steep for us Indians – but 2 GB free for now is good. Apple has it’s iDisk which does something similar but this takes the idea to all Internet users. 9) Orkut.com – It has opened up to API’s, its going the Facebook way. There are a few changes, more security (well a little more). It’s trademark simplicity remains. The challenge will be to integrate this simplicity with API’s. I think Orkut will succeed in doing so. India’s Youth Icon and a major hit in the Less Developed World – expect a lot from Orkut. 10) LinkedIn – Not an extremely new social network, but again a micro social network which has succeeded at maintaining quality. My pick for ‘most useful Social Network’.
Here are a few developments at Facebook that would excite investors and social media enthusiasts alike. Facebook tries to be worth its while.
Engaging Communities in Advertising
- ciSocial targeting. In simple words, that means placing ads within social contexts. It’s important to note that products and services are consumed primarily within a social context. Authorities in the world of marketing are excited about social targeting because one of the main concerns for any firm is when, how and to whom they should market their products – and evidence from a recent study by Shawndra Hill, a Wharton Business School Professor suggests that social networks may be one way to answer the question of relevance. She says "We provide strong evidence that whether and how well a consumer is linked to existing customers is a powerful characteristic on which to base direct marketing decisions. Our results indicate that a firm can benefit from the use of social networks to predict the likelihood of purchasing.". The study concludes that consumers linked to a prior customer -- adopt a service at a rate three to five times greater than baseline groups.
In addition, social networks can also be used to highlight key target audiences based on non traditional, almost psychographic kind of segmentations on the basis of interests, activities, and opinions – this is generally the shortfall of conventional segmentation and targeting. So there definitely is a lot of buzz happening on the ‘social media marketing’ scene (which WATConsult, the brand i work for specializes in).
Contextual Advertising on Social Networks
- It allows advertisers to choose the key words for which it seeks to generate clicks and simultaneously gives the advertiser an idea of how many people fit the description of being likely to click on that key word. (a handy research tool for marketers and an exciting tool for advertisers to view since they anyway get the option of targeting specific audiences and now they can also know what they are looking at in terms of sheer numbers). I do confess however that the numbers can be slightly overestimated since not everyone will probably click on the links. To counter that Facebook has used a Google style fee collection method of Cost per Click (CPC) and also Cost per Thousand or Mille (CPM).
How exactly does it work?
- To give you an idea, for advertising WATBlog on Facebook with keywords such as web, advertising, technology, blogging, India; FaceBook estimated that there are about 1,300 people who are likely to click on our link. In a sense this kind of estimate is good if delivered because in the future it will lead to added credibility in terms of accuracy for the Facebook advertising brand. Observing this also gives a sense of where advertising as a whole, and particularly web advertising is heading (if not already there) – advertising HAS to be contextual and this is the first big social network player after Google who has demonstrated that (although I am sure they learnt a lot from Google’s text book).
Niche or Mass?
- I I have to confess however, that in terms of sheer numbers, 1,300 people for all the key words we highlighted is very small – miniscule in fact. So maybe advertising on FaceBook is great for niche companies (like ours) but probably for mass companies, the numbers may not deliver , at least not in India. Also one notices that in a bid to deliver more numbers, companies may start adding more keywords to their preferences (eg. WATBlog may start to add ‘engineering’, ‘computer’ etc – basically keywords that are not clearly related to WATBlog) and this may lead to loss of contextuality (which is the core USP in the first place)
Where the power lies? (Or does it?)
- Another leaf that FaceBook has taken out of Google’s learning is that makers of ads are allowed to customize their own ads. Everything from the headline to the description. Seeing this, one is overawed with respect to the barriers to entry (or lack of them) for advertising now! Anyone can be an advertiser and the emphasis is on creating a buzz – notice now that this kind of advertising is not doing much branding. The onus of branding lies with the page that the user is clicking on. So again, to reiterate, on the internet, your web page is probably your strongest branding tool (unlike in terms of mass marketing consumption products and related categories)
The Replacement for Client – Agency Meetings!
- One can also see that FaceBook produces real time analysis for its advertisers (very similar to Google Analytics, thus they are constantly getting feedback on their advertising. So you don’t need any client agency meetings – saves time and also this is hard core quantifiable data. Again the onus is on the advertiser as to what he makes of the insights provided to him. This is an amazing feature of the internet in general – the onus and the power lies with the consumer (in this case FaceBook’s consumer is the advertiser) and thus the advertiser creates, dictates, and executes content. The fact that content is in the hands of the consumer is easily the biggest plus of Social 2.0 (among other things) and its great to see FaceBook bringing in its core strengths and features into monetization exercises as well – a learning for e – businesses, especially content driven e – businesses.
What is likely to be seen in this space with respect to Facebook in India?
- I see smaller advertisers generating a lot of traffic from Facebook especially in India and this is again due to contextuality and low barriers to entry – you need about $5 or Rs. 200 a day minimum to advertise on FaceBook (mass media in India is more than expensive. About Rs. 3.5 lakh for a 10 second TV slot on Prime time television, a full page ad in a Newspaper is a little more expensive – I don’t know the figures so I wont speculate!) Again notice that Facebook looks to grow its ad revenues the same way that Google did! – by involving small players to pay small sums by offering them superior services. That is one place where conventional advertising agencies have failed – they have failed to tap in on clients that may have small budgets for advertising but in terms of volumes, they are a large chunk of any economic market. Thus (side tracking a bit) – conventional advertising service agencies in the future are going to have to figure out ways to service small clients in volumes (possibly using the web and their strong brand equities). This is crucial in an economy like India which is growing and slated to have a per capita income of Rs. 20 lakh by 2020 (this economy is also probably high on the table in terms of entrepreneurship – so how to service all those mushrooming small companies with a budget for marketing themselves). I see an opportunity for conventional advertising because companies like Google and Facebook are still focusing on generating that ‘Buzz’ while ignoring the branding that backs the buzz – that’s where conventional agencies can capitalize on their expertise. Scale still would remain an issue they would need to sort out.
