Facing the Future

Does the Facebook fiasco of the last week matter?  It does, because it identifies the forces and tensions that are struggling to determine control of social media and the future of virtual communities.  In one corner are the companies that structure the internet, such as Facebook, that create the technological interfaces that bring people into contact with other people, goods, services, and information.  In another corner, there are the investors, corporations, companies, and other institutions who hope that these communities will serve as markets and prospective client bases that will generate profits.  In a third corner there are the various individuals who hope to engage with other individuals, companies, and other information sources in an honest, trustworthy manner.  As the Facebook story shows, there is no simple alignment between these forces.  For a full blow-by-blow of the last week, see Julianne Pepitone’s CNN Money Blog.  The key question, however, is simple.  What is Facebook worth?  From the investor perspective, does Facebook have a clear plan for how it will monetize the personal information that users provide to it in overwhelming amounts every day?  From an individual user perspective, does this plan provide enough benefits to keep the daily download of free and valuable information flowing?

It is easy to understand why Facebook’s collection of data makes marketers salivate.  Users willingly share contextualized information about who they know, how they know those people, and what interests they share.  The majority of adults who use social media, according to a 2011 Pew Internet Survey, use it to stay in touch with current friends (67%), family (64%), and old friends (50%); the next highest reasons are sharing hobbies or interests (14%) and making new friends (9%).  Marketing 101 tells us that the way to a consumer (or client’s) heart is through his/her needs.  Propose a solution to a clearly defined problem and the sale is at least half made.  Marketing 101 also tells us that people are more likely to trust information from known sources, including people they know or organizations they trust.  Publicize a product or idea through word of mouth, and obtain stronger credibility and more lasting awareness.  The contextualized information available through Facebook is a treasure trove of information that marketers can use to sell effectively.  Just browse Inside CRM’s 100 Tools and Tips.

So why the doubt this week?  First, investors are not convinced that they will receive a return on their investment.  One question is whether Facebook has the technological infrastructure in place to literally translate ‘likes’ into sales in a structured, guaranteed manner. The technology for culling through the mass of information to identify the most lucrative correlations and act upon them in a timely fashion may not be mature enough yet.  However, there is another issue.  Will the Internet communities created through technological interfaces such as Facebook remain constrained by those technologies?  Or, will they also mature, and demand more communal control over the terms of their participation?

Sources

Editors.  The Facebook Marketing Toolbox:  100 Tools and Tips to Tap the Facebook Customer Base.  Insider CRM, Retrieved May 26, 2012 from http://www.focus.com/fyi/facebook-marketing-toolbox-100-tools-and-tips-tap-facebook/

Pepitone, J. (2012, May 23).  Facebook IPO:  What the %$#! happened?  CNNMoneyTech. Retrieved May 24, 2012 from  http://money.cnn.com/2012/05/23/technology/facebook-ipo-what-went-wrong/index.htm

Smith, A. (2011, November 15).  Why Americans Use Social Media.  Pew Internet Survey.  Retrieved May 24, 2012 from http://www.pewinternet.org/Reports/2011/Why-Americans-Use-Social-Media/Main-report.aspx

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5 thoughts on “Facing the Future

  1. Nice post, this will be an interesting one to watch. You have to wonder whether with all that money the developers will move on to the next fun thing and whether it will all stay the same and if trust will remain in the product.

  2. Donya,

    You brought up some really good points in this post. Somehow I was not surprised at the doubt surrounding Facebook this past week. As much as everyone I know is on Facebook, many are unhappy with it. It feels to me like it is disorganized and unclear about its direction. I have a personal page and a business page, and I am disappointed with the features available as a business owner using Facebook. They really need to start analyzing their goals and move in a direction and start making some changes. There is so much potential, but just not a lot coming out of it. When I compare Facebook’s functionality with say a SM site such as Etsy.com, in my opinion Facebook fails in many way. It just doesn’t seem to be leading the way in cool features, and it’s not user friendly at all.

    Very informative and interesting post!

    Anissa

  3. Donya,

    Great insight on the future of Facebook. Something that I feel could jeopardize their future is the selling of personal information to third parties. Facebook does have invaluable information about millions of consumers, and now that they have gone public, the need to generate more revenue may lead to this. According to the ZDNet blog, 70% of people don’t trust Facebook with their personal information and have adjusted their privacy settings accordingly. What they don’t realize is that Facebook still has all of their information, even though they are hidden from others through privacy settings.

    http://www.zdnet.com/blog/facebook/70-dont-trust-facebook-with-their-personal-information/12829

  4. Donya,
    A very great post that outlines the man attributes required for any business savvy entity wishing to doing well in their industry. I think the focus on staying committed to what motivates consumers are the strongest key to reaching success.

    Thanks,
    Amelia

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