SMUG Social Media University Global

Facebook > WSJ + Chicago Tribune + LA Times + Chicago Cubs + YouTube

So you still don’t think Facebook is a big deal? Today’s Wall Street Journal reports that Microsoft (MSFT) has agreed to purchase a 1.6 percent stake in Facebook for $240 million. That pegs the overall value of Facebook at $15 billion.

In the real estate world, when setting a market price for a house my friends Ben Martin (or at least the people in his Virginia Association of Realtors) and Daniel Rothamel look at what they call “comparables.” They ask, “What price have similar houses in the neighborhood brought recently?” Let’s look at the comparables for Facebook. In roughly the last year:

Rupert Murdoch’s Newscorp paid $5 billion for the venerable Wall Street Journal
Sam Zell bought the Chicago Tribune (which owns the Chicago Cubs and had earlier purchased the Los Angeles Times), for $8 billion
Google (GOOG) gobbled YouTube for $1.65 billion
Avista Capital acquired the Minneapolis-St. Paul Star Tribune (and a few blocks of prime downtown real estate) for $530 million.

Add them all together, and they’re barely equal to the valuation Microsoft placed on Facebook.

Which just shows that for Facebook there really aren’t any comparables. Why?

Facebook has 85 percent of college students in its network, and a similar percentage of recent graduates. At a conference I attended earlier this year, I heard that David’s Bridal has found that people spend more money in the five years after they get married than they do in any five-year period. Facebook has the ability to help advertisers reach these people in their golden spending years. If, as David Walker said about Medicare, “Demographics are destiny,” Facebook’s future is bright indeed.
Facebook’s growth in other demographics is similarly astonishing. In adding 200,000 new users per day, Facebook ran out of college students to bring in a long time ago. The great majority of the growth this year has been in older adults and internationally. Shel Israel said yesterday that in Israel, where the primary language is Hebrew, Facebook now has nearly 100,000 users, which is up 33 percent in the last 9 days.
Facebook users don’t (mostly) just sign up for an account and forget it. Over half of its users visit the site at least once a day, and the average time spent on Facebook is 20 minutes per day.

I will confess that when it was reported last year that Mark Zuckerberg had turned down $1 billion or more for Facebook, I thought he would regret it.

That was before I actually tried Facebook. If you haven’t tried it, you should. Shel Israel says it’s the most beneficial professional networking tool he has ever used. My other friend Shel, Shel Holtz, and his partner (in the podcasting sense) Neville Hobson, in their For Immediate Release podcast for PR professionals, talk about Facebook in every program. They’ve joked that they have a rule that they have to mention Facebook at least once in each of their twice-weekly podcasts, but the reality is Facebook is that important.

Steve Ballmer obviously thinks so. And if you’re in sales, marketing, PR or have any need for professional networking, so should you.

Lest Shel Israel take me to task for that last line, I want to emphasize that you need to understand Facebook and social networking, and not see it as just another channel to force-feed your marketing messages to a captive audience. They (we) are not an audience. We’re creating content, too. Markets are conversations, and that involves both speaking and listening.

Microsoft is betting big that Facebook is where a lot of those conversations will be happening.

Technorati: Facebook, Google, Microsoft, MSFT, GOOG, Wall Street Journal, Chicago Tribune, Los Angeles Times, Star Tribune, Newscorp, Rupert Murdoch, Yahoo, FIR, For Immediate Release, Shel Israel, Shel Holtz, Neville Hobson, Steve Ballmer.

3 Facebook Flyers Advantages vs. Google AdWords

With Google netting over $1 billion in profits per quarter, obviously the Google AdWords program that provides ads contextualized to search terms is highly effective for marketers. In a previous post I discussed how the Facebook Flyers program may give Google a run for some of that money.

It’s not that I see AdWords spending declining, but as marketers move their advertising away from TV and into web-based vehicles, I see Facebook having potential to capture a nice chunk of that growth. Google’s program, being based on search, means people are looking for something in particular and are inclined to click some link to go to some other web site. As Alec Saunders says, there is more likely to be an intent to buy, which may “bias advertisers in favor of Google Adwords.”

I think they should be biased in favor of Google Adwords. It’s obviously a great business that’s already working. In Facebook, people are focused on their networking, not looking for someplace else to go.

But Facebook Flyers do have at least three significant advantages that could lead to them being successful in grabbing a nice share of online advertising revenue.

First, Facebook has no external incentives for Click Fraud.

With Google’s Adsense program, by contrast, people who have Google ads on their site have a financial incentive to participate in click-fraud rings.

For example, if Arnold runs up clicks on the Google ads on Bob’s site, and Bob clicks on Google ads on Carl’s site, and Carl clicks on Arnold’s Google ads, the only losers are the advertisers. Arnold, Bob, Carl and Google all share the proceeds from the extra clicks. Google claims to be cracking down on click fraud to protect the viability of its pay-per-click model, but its partner sites have powerful incentives to pile on extra clicks.

With Facebook Flyers, the people on whose profiles the ads appear don’t share in the revenue. Facebook is the only beneficiary of the clicks, so no one else has any incentive for click fraud. And if Facebook employees run up the clicks, it will only hurt the long-term viability of the Flyers program.

Google has to pay the site owners to have its ads included. Facebook owns the site where lots of people are spending lots of time. Some people say companies are factoring click fraud into the price of their Adwords bids. Probably so. But even if the click-through rate is low, if the clicks are more likely to be real, this gives Facebook a major advantage.

Second, Facebook has a huge amount of demographic data about its users.

It’s great for Google to bring up ads related to a keyword search, when someone is out looking for a particular product. But in Facebook, particularly as its keyword targeting becomes more sophisticated, it should be possible in some cases to serve ads to people before they know they want something. That’s what Amazon does with its book recommendations. I don’t know whether my wedding video flyers targeted to engaged women in my local community will work or not (I probably need to raise my per-click bid above $.10), but if my ad shows up before the brides-to-be think to use Google to search for video and photography services, Facebook might beat Google to the Altar.

Third, less competition for Facebook Flyers may mean lower per-click rates than what you find with Google.

Everyone is using Google, so they are bidding up the price on keywords. The Facebook Flyers program is newer, so you may have a better chance of getting clicks at a lower price, at least until it becomes widely perceived that this is a worthwhile advertising platform. So there is an early adopter advantage here.

And if no one clicks your ads, you’re not out anything.

On the other hand, the Facebook Flyers are limited to one per page, so the inventory to sell may not be as big, which may drive up the price you need to pay to have your flyer seen. The engaged women I’m seeing as potential customers may also be college students, and a company offering used textbooks online may be bidding to have its flyers displayed to the same people.

And of course, Facebook has its Flyers Basic program, on which you pay for display instead of paying per click. If Facebook has a choice of getting a guaranteed $0.002 for each flyer it serves, as opposed to $.10 per click, it may make sense to bias toward the guaranteed revenue. The break-even for Facebook in the PPC program, at $.10 per click, is a 2 percent click-through. (So yeah, I definitely need to raise my bid.)

I’ll keep you posted on what I learn, and will appreciate hearing any examples of Facebook Flyers success you have.

Technorati: Facebook, Facebook Flyers, Google, Adwords, Adsense, PPC, marketing, advertising, click fraud

Facebook PPC Marketing: The Next eBay?

Facebook‘s new pay-per-click (PPC) advertising program through Facebook Flyers Pro looks like it could be a strong rival to Google’s Adsense program. It’s really easy to use, as I discovered tonight. You might want to try it, too.

I think it might be the next eBay, creating broad-based marketing opportunities, especially for home-based businesses.

Think about what kinds of people are most likely to appreciate your company’s products or services. Then go to the Flyers Pro page and enter those demographics in the search fields, and you’ll get a feel for how many potential customers you can reach through Facebook PPC.

For example, I decided to check out how many married Canadian men ages 39-41 are in Facebook, and here’s what I found:

I have no idea what kind of product someone might want to try to sell to that demographic.

But with Facebook, you could.

So then I got to thinking, “What if I was promoting a concert in Minneapolis for, say, Lionel Richie? How many people could I reach?”

Maybe in this case, promoting through an all-80s radio station would be a better approach. But if I were marketing Lionel Richie memorabilia nationally, I could advertise via PPC Facebook flyers to about 6,640 of his fans.

I think for some products and services, Facebook Flyers could enable a version of what David’s Bridal calls, “Lifestage marketing.” The idea is to understand what services people might be needing based on where they are in life, and putting information in their path that they might find valuable.

So I’m giving it a try with the fledgling wedding photography and video service my brother Mark and I are exploring. It started with my daughter Rachel’s wedding (She met her husband, Kyle, on Facebook. He says they actually met at Caribou Coffee, but that was only after they had arranged the meeting through Facebook.)

Anyway, Mark is a photography buff, and I enjoy making videos, so for Rachel and Kyle’s wedding Mark took lots of candid shots and I worked with a friend to get several video angles on the ceremony and reception. I did a 10-minute highlight video of the vows, and we got prints of Mark’s several hundred photos. Given the cost of most professional photography, and the reprint restrictions most photographers place on the photos, we thought there might be some couples that would appreciate being able to pay a flat rate and then own all of the photos and footage.

Since then, I’ve shot video at a couple more weddings (although I still have to edit the second, and I still owe Rachel and Kyle their full-length Director’s Cut version). Mark has a great job, and so do I, but we’re thinking this might make some nice weekend work. And maybe we can train our sons to do this, too, which would be a good way for them to work their way through college.

So I created an Aase Wedding Photography and Video Facebook group (go ahead and click that link: it’s not costing me anything!), where I uploaded a sample video and some photos. And then I created the Facebook flyer you see above. But instead of paying for how many times it is displayed, now I can pay per click. I’m targeting about 960 engaged women over age 19 in Rochester, MN. Maybe later we could expand the flyer run to elsewhere in Minnesota, Iowa or Wisconsin, but we wouldn’t want to travel beyond those states.

I just created the ad tonight, so I don’t know how well it will work. I may need to raise my bid level to get it shown. But the fun part is that I can experiment, and it isn’t make-or-break for my livelihood. Mark and I don’t need the wedding work. But it might make a nice family business.

I’ll let you know what I learn through this experiment.

Do you have a story to tell of your experience with advertising through Facebook Flyers? I’d love to hear it.

Technorati: Facebook, PPC, Google, AdSense, eBay, Wedding, Photos, Video, Marketing, Lionel Richie

LinkedIn: Social Networking without the Social

I’m on LinkedIn, and I think it’s a good site for what it does, but I agree with Nick O’Neill at AllFacebook that Facebook‘s moves into professional networking will put a lot of pressure on LinkedIn. His characterization of LinkedIn as a piece of charred bread and as sedentary waterfowl may be overstating it, but Facebook’s threat to overwhelm LinkedIn is real.

Nick’s post was spurred by the launch of the “Networking” choice being listed among the “Looking for” choices in Facebook’s Relationships tab.

(As an aside, maybe it’s because I’m listed as married that the “Random Play” and “Whatever I can get” options aren’t available. If so, I think that’s a great part of the implementation of the Relationships feature enhancement. But why is “Dating” still a choice?)

As Nick points out, Facebook still needs to finish a few steps in making its professional networking features fully functional. Having a way to distinguish family vs. personal vs. professional “friends” and to adjust the level of access they have to your profile will be important. And if Facebook enables us to search not just within our work and geographic networks, but among friends of friends, it will have essentially replicated the key functionality of LinkedIn.

At that point, to build on Nick’s metaphors, LinkedIn may be a Thanksgiving turkey, stuffed with toasty breadcrumbs. He puts it well when he says “LinkedIn has limited messaging features and is essentially a public extension of my Outlook contact list.”

I see LinkedIn as more than that: It’s also a place to publish your professional resume, to possibly have it validated through recommendations from others, and potentially to recruit employees. But even in an economy in which people are expected to have a dozen jobs by age 38, it’s not a site most will visit with any real frequency. Certainly nothing like we do with Facebook.

I go to LinkedIn only when I get a connection request from someone I know. I’m glad to connect in that way, and it doesn’t take long to confirm.

I check Facebook, by contrast, at least twice a day: before I leave for work and in the evening. Because I have Facebook Mobile, I get a text message when someone friends me or sends me a message, so I check in response to those, too…or else just reply through my cell phone.

Just as eBay is “the” place to sell goods by auction on the web because it has the critical mass of sellers and buyers, I believe Facebook will become the all-purpose networking site, both personal and professional. I’m not going to get rid of my LinkedIn profile. It may be useful to me someday, and it doesn’t take much effort to maintain it. But it’s social networking without the social, which will make it difficult to compete with Facebook.

LinkedIn has 14 million total users, which is roughly the number Facebook has added in the last three months. And more than half of Facebook’s 48 million users are going there daily.
Maybe Nick wasn’t overstating Facebook’s threat to LinkedIn. What do you think?
Technorati: LinkedIn, Facebook, Social Networking, Social Networks, professional, networking