Facebook, Crappy Business, & A Wee Li’l Thing

Bo Peabody wrote a thought-provoking article for Business Insider called “Facebook And Twitter Will Always Be Crappy Businesses“.  I had to respond to a few things:

  • It is still too early to tell what brand managers are going to do, particularly on Facebook.  You’re talking about a group of businesses (brands and agencies) with highly engrained habits and beliefs after decades of one-way, mass communication with customers. Social media and online advertising is simply new. Media buyers still don’t know how to get their arms around it, or how to efficiently buy it. But mental shifts are happening.
  • Proctor & Gamble seems to be making quite an investment in Facebook.  Yes, they have a large experimental budget (they’ve been my customers with that budget), but this doesn’t sound like experimenting anymore.
  • I’m a big believer in virtual goods when tied to the right experience design.  While I’ve attended events where Facebook execs dismiss virtual goods as niche compared to advertising, you know that they have studied the large Chinese web companies which make the bulk of their money from virtual goods of different sorts.  Contrary to Bo Peabody’s statement that “[a]ny monetization efforts are going to drive some users away and that will in turn erode value for the users that remain” — one of the benefits of virtual goods is that each user can determine their own level of investment.

But more than anything, I had to raise my eyebrows when Bo Peabody wrote, “Through my experience building Tripod and Everyday Health I’ve concluded that individuals get on the Web for one of two reasons: to find people or to find information.

Come on Bo, you can’t define the world through your own lense! The dominant activity on Facebook is playing games, and YouTube and Hulu ain’t no slouches either.  Yes, I’m talking about entertainment.   Furthermore, there is this wee little trend going on. I’ll just put it out there for consideration.  It’s only hundreds of billions of dollars, and it’s called ecommerce.

4 Comments Facebook, Crappy Business, & A Wee Li’l Thing

  1. Claudia Guzman February 16, 2010 at 7:30 pm

    Adaptations of the old technologies do not necessarily make them better than their counterparts that existed before the WWW. Companies such as MySpace and Facebook sell online advertising on their site. Hence, they are seeking large memberships, and charging for membership would be counterproductive.

  2. Claudia Guzman February 16, 2010 at 2:30 pm

    Adaptations of the old technologies do not necessarily make them better than their counterparts that existed before the WWW. Companies such as MySpace and Facebook sell online advertising on their site. Hence, they are seeking large memberships, and charging for membership would be counterproductive.

  3. Gary Valan February 20, 2010 at 6:39 am

    Maybe the headline was intended to be sensational, I don’t know. There’s a bit of truth to what he says about being on social networks to connect with people. But I would add that FB, Twitter and the competition have become more than friends meeting up or following friends online. I agree with you that its also about entertainment, whether it leads to enough ecommerce to pay off for FB and its partners remains to be seen. They have raised several hundred million to find the gold. With 400M + users they have the luxury of testing out various business ideas. Like Willie Sutton said, might be an urban legend, on robbing banks, “Go where the money is…and go there often.” In FB’s case, that’s where the people are, for now at least.

  4. Gary Valan February 20, 2010 at 1:39 am

    Maybe the headline was intended to be sensational, I don't know. There's a bit of truth to what he says about being on social networks to connect with people. But I would add that FB, Twitter and the competition have become more than friends meeting up or following friends online. I agree with you that its also about entertainment, whether it leads to enough ecommerce to pay off for FB and its partners remains to be seen. They have raised several hundred million to find the gold. With 400M + users they have the luxury of testing out various business ideas. Like Willie Sutton said, might be an urban legend, on robbing banks, “Go where the money is…and go there often.” In FB's case, that's where the people are, for now at least.

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