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?
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