At last week’s video chat announcement, Chief Executive Officer Mark Zuckerberg spoke confidently about the future of Facebook, stating that it was inevitable that the company would reach one billion users. He said it was time that people turned their attention to the integration of social media into new industries and verticals. What he was effectively articulating is the company’s new paradigm under which it is operating, a lens which we can use to further understand i’s ongoing battle with Google.
The Attention War Era
Over the past ten years, and increasingly in the past five, many analysts (or at least media scholars) have used “attention economics” as a model for understanding the rapidly evolving and expanding digital media industry.
Whether it’s applications, online media companies, or others involved in digital media, it’s widely known that consumers have a limited about of time in which they can consume digital content. The currency of time as it relates to digital media is attention. While there are complex theories surrounding attention, Google and Facebook have (or should have) relatively simplistic views of attention: the more of it they have, the more money they can generate.
Over the past decade, most Internet companies have focused on a single metric, users. Most developers continue to this day to use daily, weekly, and monthly active users as the most important metric when determining the value of their applications. The theory is straightforward: the more users developers have, the more money they make. Even Zynga, the largest of all the developers on Facebook, uses this model for determining a game’s monetization potential. Granted, this is an extremely simplistic view, but it’s the best way to view things for the purpose of this article.
So when Zuckerberg spoke to the press last week he spoke from a position of power (Facebook has the most attention of any site on the web), essentially projecting his company to a level on par with Google, which already has already attained the much coveted 1 billion user milestone.
Reaching this milestone, or just coming close, enables your company to prioritize monetization models that contrast companies focused on growth (user acquisition). In the attention economy, one of the largest revenue opportunities is brand advertising.
Radio, television, and increasingly online companies are battling for consumers’ attention just so they can serve more ads to them. Facebook is no exception. This year Facebook has been projected to generate upwards of $4 billion in revenue, the vast majority of which comes from the self-serve ads platform.
In the long-run, a larger percentage of the company’s revenue is expected to come from brand advertising, supported by engagement ads and any new offerings the company generates in the mean time. If there was one area poised for dramatic growth, brand advertising would be it.
Facebook’s strategy is no secret, though. Google, which currently runs the largest online advertising platform, is well aware of the opportunity, but unfortunately is losing the attention war.
While YouTube commands a large percentage of attention on the web, that’s still a fraction of Facebook’s. But Google isn’t sitting idly. The company appears to believe that social media is the key to unlocking the vault of consumer attention.
Less than two weeks after launch, Google Plus is already garnering a large amount of attention. It’s too early to tell whether or not Google’s social strategy will play out, but there’s no doubt that the search giant wants to get a piece of the action.
Facebook’s Upcoming Platform
As the leader, Facebook is well aware of the increasing competitive threats, but also has plans to combat it. In the coming months, the social network will announce a new version of the company’s platform. While rumors are circulating about the HTML5-based project Spartan, the company also has ambitious plans for canvas applications on the site.
The most significant news to leak so far is that Spotify’s new integration with Facebook will include the ability for developers to access Spotify’s massive database of music. Music already accounts for a major piece of the attention economy (think: Pandora).
Yet Facebook’s plans don’t stop there. Many people that we’ve spoken to speculate that Zuckerberg’s decision to add Reed Hastings, chief executive officer of Netflix, to the company’s board is about much more than just adding another powerful Silicon Valley executive to the company’s already powerful board.
Some believe that the move is an indicator that Zuckerberg wants access to Neflix’s massive library of digital content. The plans don’t stop there. An ambitious way of viewing things would be calling Facebook’s plans part of a strategy that involves turning the company into an online entertainment platform. Facebook already has games, but add in movies, television, and music, and you can imagine how much time users could potentially spend on the site.
Granted, few of these plans have yet to materialize and there’s a good chance that many of them won’t. But if you want a glimpse into one way Facebook and Google are thinking about the future, look no further than attention because it will be the currency that these companies battle for.