1. facebook

Why Facebook should stop smoking the Advertising crack pipe

Written By , 769 days ago

There’s a piece on MyCustomer.com today – “Is Facebook’s ‘want’ button the saviour of social commerce?” – which talks about a US-only pilot scheme:

“A new application called ‘Collections’ that allows retailers to create a catalogue in Facebook and post ‘like’, ‘want’ or ‘collect’ buttons on product images within newsfeeds.”

The article makes the point that Facebook has consistently failed to get the much vaunted ‘f-commerce’ movement off the ground on any scale.

“Cracking the commerce side of the business is essential if Facebook is to turn around the negative perception of its future profitability,” says Mark Cluer, MD of PMA Digital. “In the wake of its share price dive post-IPO, Facebook has been under pressure to come up with ways to increase its value. The ‘want’ button is surely an attempt to convince investors of Facebook’s future value.”

There is no doubt that Facebook has struggled for years to try and engineer-in monetisation to the epic levels of users and usage that it enjoys.

What if they have simply been going about it the wrong way?

Arguably, Facebook has been trying to smash together old-fashioned advertising business models (impressions, CPM, etc.) with a new kind of community service whose users – in the main – find this kind of advertising unwelcome and inappropriate.  That’s why they have struggled historically and will continue to.

So why not turn the model on its head.

From CRM, to VRM (ref.).

We think Facebook could become the Vendor Relationship Marketing platform for the globe.
Facebook Collections – which is being written about as a competitor to Pinterest – seems to us like a step towards VRM, whether Facebook realises it or not.

Imagine it, Facebook 2.0… All advertising banned (if you are signed-up to the Facebook VRM personal data management service): individual FB users managing their personal data (likes, wants, needs) and only granting commercial suppliers access to it when it suits them.

The concept of self-managed data is already part of Facebook’s DNA.  Most Facebook users have some idea about how to manage privacy levels on their account, which means that one significant barrier has already been overcome.

If 10% of Facebook’s users were prepared to pay $5 a month for Facebook’s VRM personal data service, it would generate $6bn in annual revenues.  Current Facebook forecast for 2012 revenues from advertising is $4.2bn.

So that’s why Facebook should turn its back on Advertising.

From privacy supervillain to superhero, at a single bound.

——-

References:
TechCrunch on Facebook Collections : 8th October 2012
Doc Searls’ Project CRM (Harvard)
Forbes.com – Facebook advertising revenue forecast : 30th August 2012
eMarketer – Reduced Estimate for Facebook Revenues : 31st August 2012

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Discussion

  1. 01. Doc Searls

    I think this would be a great move for Facebook. I’ve also thought the same for Google, and even suggested that Google get into retailing its goods directly, e.g. with Maps on iOS, rather than living only (or mostly) off advertising.

    Alas, I’ve been told by insiders at Google that the company doesn’t want to make less than $1 million per employee, and that’s what would happen if its consumers became customers. They would have to give real service, and that would require hiring real people to staff call centers and the rest of it. I suppose the same mentality prevails at Facebook. But, as you say, there are differences with Facebook that would give it a huge advantage in an intention economy.

    Be curious to see if they make any moves in that direction. They have thus far not been active at all in ProjectVRM. Nothing to stop them, though. :-)


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