Archives: August 2008

Last week I wrote about Michael Phelps’ rapidly increasing popularity on Facebook as the company decided to assist Phelps by promoting his fan page on the top of Facebook. The end result is that Michael Phelps’ fan page has become the most popular page on Facebook, overtaking Obama now attracting over 1.425 million fans versus Barack who has over 1.389 million fans.

What does this mean for Michael Phelps? Well, first of all it means that a run as a Presidential candidate is now warranted. It also means that Phelps is sure to attract millions of dollars in sponsorships when he returns home from the Olympics. I contacted Barack Obama for comment but have yet to receive a response as he is busy preparing for his speech at the Democratic National Convention in Colorado this week.

Hey Barack, we’re not mad at you for not replying to our emails, we know you are busy trying to become the next President. Michael Phelps was at least kind enough to update with the following wall post on his profile:

Hey guys. Thanks so much for all the support – you guys are awesome! I know I haven’t been around lately (been a little busy), but I should be able to post some cool stuff now. Just to give you an update, I got to hang out in Beijing for a couple days once I finished up and met Kobe and Chris Paul. They’re definitely bringing home the gold. Now I’m on my way to London for the hand-off between Beijing and London. After that, well…just stay tuned.

Unfortunately the wall post was on his own wall, but we’ll accept that as though Phelps had contacted us directly! Congratulations to Phelps on becoming the most popular person on Facebook. We know that this is easily a bigger achievement then winning the most gold medals in a single Olympics ever.

Last week Law.com published an article highlighting a lawsuit filed by Facebook’s lawyers “against Adam Guerbuez, accusing the Canadian man of hijacking users’ accounts, impersonating them to send more than 4 million messages in March and April that market ‘offensive’ and ‘embarrassing’ products such as marijuana and penis enlargement pills.”

Read more on the Social Times

This evening I was browsing Facebook and stumbled upon the following ad that I’ve pictured on the left. The ad displays one of my friends and a book advertisement suggesting that somehow the two things are correlated. The only problem? They aren’t! If you take a look at my friend Krista’s profile, there is nothing that would suggest that she read the book unless the system somehow knew that she was active in social media and may have read the book “The rise of conversation”.

She didn’t explicitly state that she had read the book though. The other part which is confusing is that next to her it says that she recently “joined the group Jaffe Juice.” How is that relevant to the advertisement whatsoever? I understand that I may want to know what my friend is up to but when placing that information within an advertisement it doesn’t make much sense.

Facebook is in the process of improving their advertisement solutions but when it comes to Social Ads, it appears that they are still having some trouble. Just last week we wrote about Facebook’s Engagement Ads and how they could help advertisers. It makes sense that Facebook would release advertising solutions they can immediately sell but they should also be investing heavily in improving ad relevance.

I have to be honest, the advertisements on Facebook have been improving but many of them still aren’t relevant at all. I’m not sure if this is because big brands aren’t investing in Social Ads or if it’s because Facebook isn’t serving them properly. I’m not qualified to comment on how the system determines ads unfortunately but I know the one that they displayed in the picture above doesn’t make much sense at all.

Update
Wow … as usual I wasn’t the most observant person. Apparently the book that was displayed was by Joseph Jaffe. I confused the book “The Rise of Conversation” by Joseph Jaffe with the book “Here Comes Everybody” by Clay Shirky. So apparently the ad wasn’t that bad after all!

There’s a pretty well known secret among top Facebook application developers: one developer is generating over $1 million a month. Who is that developer exactly? Well, most people won’t talk about it and after some prodding around we’ve narrowed down the suspects. We aren’t going to post them though because ultimately it doesn’t matter who the individual is. All that matters is that a top application that is used for entertainment purposes is generating over $1 million a month.

Facebook Apps As a Business

While it still doesn’t qualify the company as a large business, it does emphasize the potential for applications in this space. As an individual developer or a small team of developers, $1 million a month is pretty damn good and I’m sure a large portion of that is going straight to the bank. Who’s responsible for generating this revenue?

Well there is already multiple ad networks that are generating revenue for their developers, but some of them are going so far as to speak out about how much money is being generated. Offerpal (who is also a sponsor of and participant in our Social Ad Summit) has said that developers are generating around $75 per 1,000 active daily users on average and $150-$200 for more engaging applications.

How to Generate the Big Bucks

So are you looking to become the next Facebook application millionaire? Good luck! Generating $1 million a month is pretty challenging in the current environment but if you can come up with a creative application, you may have a chance. (fluff)Friends users for instance, are so passionate about the application, that some of them went so far as to participate in a (fluff)Friends video contest. Below are a couple of the top videos.

This application and a few others like Friends For Sale, Mob Wars and Owned, are all highly engaging applications. Each of them continues to attract users months after they were launched and the applications also continue to evolve. If you are looking to build up your revenue base, then you might want to mimic many of the strategies employed by these companies.

Have you hears of any other interesting rumors about application revenue being generated?

Over the past few days I’ve been writing about the shift of social networks from technology companies to media companies at the Social Times. If you haven’t been paying attention, you might want to check out a post on Techcrunch today in which Mike Arrington argues that Facebook’s lack of a centrally controlled music service is damaging its domestic growth.

Last year I suggested that Facebook is supposed to be launching a music service after a source told me that he had spoken with somebody that interviewed for a position to run a music service. Mike Arrington says that it’s now clear that Facebook is sticking with iLike as its music partner. That was emphasized when iLike was announced as a launching member of Facebook’s Great Apps program.

Hadi discussed this during an interview with the Social Times. For Facebook to launch their own competing music service would be a bad political move but as Mike Arrington suggests, “Music is such a big category that is so completely dominated by MySpace, that it seems like they should have their overall music strategy under their direct control.”

So is music key to Facebook’s domestic growth? It’s clear that music is definitely one way to attract outside visitors. Millions of bands and artists use MySpace as their central location for promoting their work and that means millions of visitors being promoted to the site. Is there another channel that Facebook can target that has the same level of self-promoting activities?

Not that I know of. Is there any other group that you think Facebook should be targeting?

Jeremiah Owyang posted about a new type of advertisement that Tim Kendall, Director of Monetization told him about. Yesterday we were first to post about the new types of advertisements that Facebook will be releasing but Jeremiah Owyang provided more details today on what those ads will involve. Apparently the ads will encourage “members to interact with the ads by leaving comments, sharing virtual gifts, or becoming fans.”

Much of this doesn’t actually sound new. The commenting feature that Jeremiah describes sounds eerily familiar to the Facebook video ads that we broke the news about. One thing that currently doesn’t have commenting is sponsored news feed stories, so perhaps that will be an addition to this new feature. According to Jeremiah there will be three types of advertisements:

• Comment Style Ad – Users can post comments on the advertisements. The only thing new here from the sound of it is the ability to comment on news feed stories.
• Virtual Gifts Style Ad – Similar to the Indiana Jones gift campaign that was already run on Facebook, brands will be able to create virtual goods.
• Fan Style Ad – A way to become a fan of products you enjoy. Not entirely sure how this differs from Facebook fan pages but ok!

Ultimately many of these changes don’t sound very new and instead sound like a rebranding of something that already exist. The new commenting feature is really the added value. As Jeremiah Owyang points out, Facebook now has a bunch of different offerings to advertisers and marketers. Now all that needs to be done is a more thorough education for those advertisers.

This evening, Facebook announced a new set of demographic targeting features that will enable developers to limit users that view specific content. Developers may limit viewership based on age and location. With these restrictions comes a policy update which enables alcoholic beverages to be promoted. As the blog post today states:

We plan to modify this policy to permit promotion of content around the sale of alcohol, provided that you specifically use the Demographic Restrictions feature to restrict your application or content to users of appropriate legal age.

There have already been a number of applications shut down for the promotion of alcohol and it is no secret that alcohol companies are desperate to get on to Facebook. Most likely because one of the largest demographics for the site is college students. Does that mean that Facebook is going to start alcohol promotions in the near future? I don’t see why not.

Alcohol companies spend billions on advertising, so I’d guess that we’ll see many more beer and liquor ads in the near future. Perhaps Facebook will start to feel like spring break! If you’d like more details on the demographic restrictions check out the wiki page.

August 18th, 2008

Tim Kendall, Facebook’s Director of Monetization spoke at an app developer Meetup at AOL Mountain View. All Facebook covered the Social Ads panel and got a chance to catch up with Tim afterwards.

Tim Kendall

Tim’s team incubated Facebook Social Ads, and he oversees product development and product marketing for social advertsing on the Facebook platform.

Facebook Social Ads

Social advertising is a huge opportunity for Facebook and app developers. Facebook gives advertisers unprecedented reach, however, the platform is dominated by expressions of social intent – more so than commercial intent.

Facebook Social Ads is developing ways to segue users’ activities to more commercial actions, in a way that fits with the overall user experience of the platform. App developers are going to be able to participate, by having their applications accelerated by Facebook in partnership with paying advertisers.

Social advertising on Facebook is clearly experiencing rapid innovation and evolving dramatically.

Facebook Social Ads - Early Iterations:

Initially, the Social Ads program focused on leveraging the social graph to increase interest in an advertiser’s message. This increases performance relative to an advertisement that does not take advantage of knowledge of friend connections and information about those friends.

A classic example would be a campaign to promote a move that leveraged and communicated information about which of your friends watched or enjoyed a particular movie trailer.

Facebook Social Ads – Next Generation:

In the next 6-12 months, Facebook is developing the ability for advertisers to throttle usage and engagement in areas they care about. Marketers will be able to pay to accelerate usage they find valuabel, to dial up and down actions that people take on applications, as part of the Social Ads program. For instance, News Feed uses an algorthm to communicate a users actions to the friends who would find it most interesting. Marketers will be able to pay for increased or enhanced distribution above and beyond what News Feed already provides.

An example would be purchasing a ticket to a concert. Usually, a small subset of your friends would receive a notification of this action, however, in the future Cheryl Crow or Ticketmaster could pay fo r this to be distributed to your full friend group.

Summary

Tim and Facebook are clearly innovating rapidly in the Social Ads space, after defining the category initially. Facebook is exploring ways to make it completely transparent which actions are commercially accelerated on the platform, essentially in similar way to which Google color codes sponsored search links above its organic search results. Additionally, Facebook is focusing on how App Developers will be helped by this new form of monetization for their applications. Facebook will help app developers accelerate the distribution of their applications drive more usage with Facebook’s next generation of social advertising tools.

Will everyone accept how Facebook Social Ads affects the user experience (UX)?

Facebook made some minor changes to the homepage last night with one substantial change which is the removal of quick links to Facebook created applications (notes, videos and photos). Now, the status has been promoted to be the primary item within the homepage. This new update clearly marks a shift toward a more Twitter-like environment.

Additionally, statuses are no longer in the sidebar only in the news feed. The majority of the changes are extremely small but the promotion of statuses definitely emphasizes the importance of statuses. Soon enough we will see statuses as the default tab within the news feed. That would actually make a lot of sense considering Facebook’s less than efficient auto-filtering system in the feed.

I’ve noticed that viewing the unfiltered feed provides me with much more valuable information. I’ve spoken with a number of other people who have been dissatisfied with the quality of stories being displayed in the news feed. Have you had any issues with news feed content?

One of the primary issues facing consumers in the digital era is control of their private data. Yesterday I wrote about the Peter Jennings special “No Place to Hide” which covered a lot of the issues facing consumers. The reality is that munch of our transactional data is already tracked and used to create custom profiles of our identities. Online there is currently no way to manage that data and all one can rationally conclude is that somewhere along the line our data is being sold.

Read more on the Social Times