Facebook reckoning Part 2: the revenue race
Facebook are stuck between a rock and a hard place. After you’ve faffed about with the applications, added your photos and replied to those friend requests how do you keep the users hooked?
For the networks, it’s a tricky balancing act to achieve, you’ve gotta keep the cash rolling in and keep the user happy at the same time.
The networks themselves struggle to come up with their USPs and what really differentiates them from their counterparts. Facebook claim they’re a communications company. Facebook CEO Mark Zuckerberg frequently talks about the company as “an expressions company that facilitate connections”. Bebo’s international president Joanna Shields likens the site to a Blackberry – it keeps you connected with your friends and plugged into what happening with regular updates. It’s a potent analogy, all the more apt considering the company’s move to mobile.
But Bebo, at the same time, see themselves as more of a media company. Their much publicised new open media platform lets third parties publish their content, in this case video, free on the site. The new distribution deal will integrate the viewing experience into a social network environment.
Users can become fans of the video content and can then be grouped together accordingly. Bebo’s unique user demographic, generally between the age of 13 and 24, are the same age group that are moving away from the television and spending more time online. As young people watch television in less tranditional means, ie no longer “in front of the box” the time’s ripe for publishers to transfer to the social networks.
As well as facilitating other clips the open platform will let Bebo create and stream their own productions too. Kate Modern was one such fruitful venture and the stats speak for themselves. The first series, of around 155 short clips drew 35 million views with 1.5 million views each week. Sponsors of the first series included Microsoft, Proctor & Gamble, Warner Music and Paramount, and each paid up to £250,000 to appear within the show. Cadbury’s, Toyota and Aygo all saw their products placed within the video content too.
The platform manages to add to the user experience and bring in the advertising moolah at the same time; something which Facebook hasn’t quite managed yet. Their profile product placement application that allows companies specific customer information has been a revenue spinner for the site but, understandably, hasn’t had the same attraction for the user as, say, video streaming.
Facebook’s partnership with Beacon, that revenue spinner that allowed product placements in news feeds, resulted in Zuckerberg having to issue an apology in the face of 50,000 complaints from users. Friends of a Facebook user who has bought a book on Amazon, for example, would see a message about the purchase when they logged in. In terms of privacy protection, selling off information about off-site activites ventures into uncertain territory. The service was initially only opt-out and even then not obviously so.
Their misguided attempt to justify their $15 billion valuation acts as an illustration of how social media is more than somewhere to place ads.
Who can say how the race to be the most ubiquitous platform around will end? In the expansion and localisation game the networks have to be careful how they generate revenue to avoid recycling old concepts and instead concentrate on creating really attractive, innovative applications that generate repeated usage and attention.
