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If I were Facebook’s CEO …


I, like anyone born in the past 30 years, have a Facebook account – one that I use regularly and frequently. Maybe it’s just status quo working in the IT industry; maybe it’s an online backup for my photo albums; or maybe it’s yet another way to promote my own advice and commentary that I’m certain most everyone I know (or not) wants to read. At any rate there’s a lot of hype around Facebook and I’m at least certain it’s not just me. And what value does Facebook add? It doesn’t! Facebook exists because it has successfully diverted (not augmented, sorry Zuckerberg) our entire social lives to an online black hole where we feel it is necessary to post our every thought and opinion.FacebookBut what is the future of Facebook? Well, if it continues on its current path it will soon look a lot like the housing market – a lot of unqualified investments based on unfounded credit and doomed for failure. It will require as significant a bailout as the auto industry and I don’t suspect that it will acquire as much support. Until now Facebook has survived on publicity and dreams – because it was new and different, and people jumped on the bandwagon to turn a profit. It was a new product to market. Investors were banking off the potential ad revenue – well, eventually. In the beginning I don’t think even they knew what it was but it attracted everyone and therefore there must be a way to profit from it.

Were they wrong? Not entirely. Facebook could actually survive but it will require an entirely new approach to leveraging existing data and marketing it effectively. And it won’t happen without some serious perseverance and tough roads ahead. What Facebook does have is data and they have a lot of it. I read an article recently by Peter Guber on LinkedIn titled “Turning Data into Dollars” and in it he references Josh James stating that there isn’t a single CEO who isn’t thinking about data – and I don’t think he could have been more accurate.

Consider what you post on Facebook on a daily basis: what you “like”, where you “check-in”, who your friends are, where you work, etc. Analyze 6+ years of these actions and one could probably identify activity patterns, develop user profiles across large demographics, create most active industry profiles by region, and much more. That is where the value is in Facebook data but they have yet to leverage it!

With all of this valuable data Facebook opted to devise new marketing outlets such as “Sponsored Stories” using your friends’ names and profile pictures to promote a product to you. Really Facebook? Not only was it a failure but it resulted in law suits and offended its user-base. Another article recommended that Facebook return to the standard, well-known marketing tactics that most (okay, all) of the rest of the world employs (there’s a reason, it works). I’m in support of taking risks, trying new things, or even creating new markets … with one caveat – you have to pull it off! And unless you are Steve Jobs, I would be skeptical of creating new markets. At a minimum use a subset of your customer base and test with a sample of data rather than throwing all of your chips in on a single hand (and this is coming from a guy who really does usually leave the poker table after my first hand).

Even local newspapers these days are better at demographic targeting. You call them up, provide a customer list which they then cross-reference with their own subscribers to determine a demographic “profile” for your customer base and provide to you (and they’re good at it because they’ve had the same subscribers for 40 years). The first reaction is “oh wow, this is great” until one realizes that, despite now having this detailed demographic profile, they don’t know how to target it. Fortunately, the newspapers are indeed aware of this and offer an additional service whereby you can target your next bulk mail campaign to that demographic and they can do that because they know the demographics of all of their subscribers. They disseminate your printed media (even personalized if you’d like) to your target demographic still allowing you to exactly measure the return rate and all the while without selling you any of the actual data about any individuals. In other words they still maintain individual privacy as well as the need to utilize their services again for your next bulk mail campaign.

Guess what? Facebook has all of the same data in far greater detail! Consider that Facebook has (and this isn’t even touching the surface) the following data about you as an individual:

  1. Basic Information: Name, Age, Contact Details (Address, Phone Number)
  2. Employment data: Employer, Job Title (which I can leverage to estimate your income)
  3. Interests / Hobbies
  4. Friends

They could not only devise a highly accurate detailed demographic profile but they could then target ads based on those same demographics – at far cheaper cost than a bulk mailing.

Long story short – if Facebook will succeed (and I think that’s unlikely because they don’t appear to be attempting even to change direction) it will be a long uphill battle. Don’t worry! You won’t be forced to pick up a telephone or meet at a coffee shop anytime soon … I don’t believe Facebook is going away but they might end up the next Yahoo if they’re not careful. Simply put, if they will succeed then it will be because they determine how to leverage their data.

Another benefit if they do survive? If Marissa Mayer successfully flips Yahoo (and I have no doubt that she will) then Facebook could be the great next challenge. What would I do?

  1. Employ tried and true marketing tactics to establish a baseline and a strong dependable foundation.
  2. Start leveraging demographics in the way that newspapers already do.
  3. Sell ad distribution as a service. Isn’t it already you say? No, actually – even with Google DoubleClick (DFP) the user defines the actual targeting. By selling distribution as a service you make it marketable to small businesses who don’t know how to do this otherwise or simply don’t want to invest the time and effort.
  4. Market access to leads/lists without selling any data. How? Again, this is a service – create distribution lists, demographic profiles (the more complex, defined by number of qualifiers or level of detail, the higher the cost). For example, a law firm could target “Twenty-year old males who frequent bars” for a DUI defense advertisement. And, since Facebook would do the distribution they can tell you exactly what the return rate is based on the industry of the actual advertiser.
  5. Acquire a source to cross-reference customer employment data with self-reported financial data (Payscale.com, Salary.com, and Glassdoor.com come to mind). See, like Yahoo and not like Hewlett Packard, there are good reasons to make acquisitions – when there is a specific focus and an intent, and it will add value to your bottom line!
  6. Add a “dislike” button – no, this is not my attempt to hide a personal request in my recommendations. Facebook today knows what you like but they don’t know what you do not like and this is simply a cheap, easy, and immediately available option to improve data quality and marketing effectiveness! It might take a person 10 times to click on an ad that they like but a single memorable dislike and they never want to see it again – so don’t waste the impressions for similar advertisements.
  7. Crowdsource subsets of data (anonymously of course) and challenge people to devise algorithms for profiling users with specific demographic profiles in mind (who goes to the bars, who will buy a wedding dress within the next 12 months, etc.).

Well, I don’t suspect Facebook will call me to replace Mark Zuckerberg any time soon but that’s my two cents!

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About christopherjcoleman

Independent IT Consultant. Cloud Expert. United States Navy Veteran. Dedicated. Focused. Driven. I make companies better by developing applications to meet specific business needs on reliable, cost-efficient cloud infrastructure. If the right solution doesn't exist then create it. I have achieved my greatest accomplishments because someone else told me "it's not possible; there is no way to do it" - and now there is.

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