1Michael Griffiths

Er, you're joking, right?

I'm a long-time reader of your site, and you usually have good content, but this _particular_ post is a trifle more immature than usual.

Facebook has had "off-site integration" since before they had Facebook Applications. It's in a number of sites that have, traditionally, been aimed at college students. http://stu.dicio.us is one example: a note-taking site.

Actually, Facebook has an entire directory of them:
Web Based: http://www.facebook.com/apps/index.php?type=2

Desktop: http://www.facebook.com/apps/index.php?type=1

In terms of "What is Facebook's advertising differentiation?" I think it's easy to assume that they'll expand on: (1) targetting specific consumers. Facebook has a _wealth_ of customer information stored in profiles, groups, and Friend relationships. Favorite movies & music can be used to determine customer choice, and present highly-relevant advertising and (2) enabling people to connect, commercially.

I expect to see the Facebook Marketplace grow, as well as other "connecting" applications. Facebook is, that that sense, in a similar position to Google: (1) they have information connecting the individual to the ad (Google has search queries, Facebook has profile information) and (2) they are connecting the two.

I think the question is less "What does Facebook bring to the table?" and more "Can Facebook execute well enough to lock out competition from Google, Microsoft, Yahoo!, and others?" (all of whom compete directly with Facebook on many levels).

July 30, 2007

2Noah Brier

Hey Michael, I appreciate the comment. I'm with you on the first part, I had hear about their off-site integration, but never seen any of it. Will poke around those links, though, thanks.

As for the second, I don't think that's a good enough point of differentiation from an advertising perspective. There are many sites with lots of information, however, most privacy policies don't allow them to use it for advertising purposes. I haven't dug into Facebook's yet, however, I expect there are some safeguards against some of the targeting your mentioning (though I may be wrong). What's more, what someone says they do and actually do are two very different things (as anyone who has sat in a focus group can attest to). So some of the information may not be so valuable anyway.

However, as Facebook grows and they continue to add features that make the site more application focused, I imagine there will be opportunities in this area. Even so, I don't know that this will be a point of differentiation.

As for point 2, do you mind expanding on "enabling people to connect, commercially"? I have no idea if this is what you're thinking, but my feelings towards the way Myspace has handled brand profiles is fairly miserable.

Finally, comparing Facebook to Google . . . as I mentioned, Google makes all its money (seriously) by being better than anyone else at capturing the point of consideration in the purchase process. Before Google came along advertisers did whatever they could to show an ad to someone who was just about to buy something, but you never quite knew where they were. However, because of the way search queries work, you are able to know exactly where in the funnel a consumer is. Take televisions, for instance, your first query might be "plasma tv", then you decide a size and it becomes "42 inch plasma television", then you decide a brand and it's "planasonic 42 inch plasma television" and finally you type a model into Google when you're ready to purchase (this isn't a perfect example because many people end up buying offline), however, that final search, the model number, is incredibly valuable because that person is ready to purchase. No amount of profile information says that.

Anyway, would love to hear your thoughts. Thanks for calling my bullshit on this one, I don't know that I had thought it through properly. :)

July 30, 2007

3David Berkowitz

As for ad differentiation, they've got a few options. One is having their advertisers host groups, and a number are doing this already, like ABC Family, Pepsi, and Reebok. A group on Facebook is far more powerful than just having friends on any social network (a la MySpace), especially if you have some way to engage the group and gain participation.

Then there are lots of other ways they can rope in paying customers, like getting advertisers to conduct polls or sponsor the $1 gifts they have for sale.

Separately, I'm really intrigued by the Facebook app ad networks that are emerging. That doesn't put money in Facebook's coffers, but there will be some interesting models nonetheless.

July 30, 2007

4Noah Brier

Right on David, forgot about polls (something they can do better than everyone else), gifts and the app ad networks. Especially curious to see where the ad networks end up, always interested when smart people bet on things.

Your point about the differences between hosted groups and friends on Myspace is well taken, however, I'm not completely convinced of the value advertisers gain from these hosted groups unless Facebook offers additional functionality to engage people . . . Need to give it some more thought.

July 30, 2007

5Tim Donza

I worked with Facebook on a campaign earlier this year and what I really thought was great about them was their consideration of the user experience. We used the sponsored story unit (which appears on the user homepage within the news feed) and saw fantastic results - it outperformed every single other placement that I'd ever seen. By limiting the advertising, they've made it more important. We were having a pretty fun contest with some big prizes - they helped us be kinda naughty and the audience really responded.

Now, I'm really not into advertorials - because they're lame and no one likes to feel tricked into spending time with advertising, but facebook really does consider the user experience (unlike myspace which charges an arm and a leg for everything and is a pretty loud/cluttered environment).

I agree, Noah, that the more functionality/utility they can offer their users the more successful advertisers will be in the space. And I think they're doing a pretty good job guarding against lame advertising, and instead focusing on solid connections.

July 30, 2007