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Business - Written by on Tuesday, February 3, 2009 9:33 - 7 Comments

Facebook Monetization Strategy: Let’s Take a Poll

What’s the best way to understand your customer? Talk to them. What happens if they don’t want to talk to you? Find them and ask them on their home turf – Facebook.

The Telegraph is reporting that Facebook has announced a strategy to monetize the site that has thus far defied monetizing. Generally the standard web start-up business model is, build something unique that people like, and then once it’s got a large enough fan base and web traffic, sell advertisements or subscriptions. After all, somebody’s got to pay for it. The problem Facebook encountered is… it turns out people don’t really like to click on tacky ads when they can rather use the site for its intended purpose and talk to their friends.

There was Facebook’s Beacon of course. But that didn’t last long, with everyone from Facebook users to privacy groups crying foul. This made Facebook rethink it’s ad strategy and the new kid on the block is called Engagements Ads, and is a Facebook initiative to bring targeted polling to Facebooks’ 150 million members. Marketing companies the world over have been salivating and thinking about all that personal, relevant, and valuable information about you that can be used to learn about how best to connect with you and your dollars. Well, rather than just give it to them, which would probably face Beacon-like ethics issues, Facebook has come up with a clever strategy that will allow companies to ask you questions through the use of polls for market research purposes. Should you be within the specific demographic that concerns the poll, as indicated by the information you enter into the system (otherwise known as your profile) … say, male, 25, and you just happen to like movies and electronics … then maybe you’ll be of interest in a Best Buy poll. The poll will automatically show up in your feed and you can choose to engage it or ignore it, your call. It’s a smart move, given how much intimate information exists on Facebook, and which can accurately serve as a screening process to serve polls to more willing candidates. If Facebook is successful in leveraging their members as a mass focus group, then marketers will be eager to exchange that information for dollars.

Where Beacon largely failed by forcing members to be part of an activity they didn’t want to be, and which invaded their privacy, Engagement Ads will be opt-in, presumably with some kind of incentive to participate.  And it’s the incentives themselves that will make or break this new Facebook initiative. There’s several conceivable scenarios. Enough bored Facebook addicts may be interested enough in a certain brand, that should it come knocking, them would be interested enough to spend a few minutes filling out a form. But then, what if (enough) people aren’t that bored. Those polls better be fun, really fun. Maybe even disguised as a game, or a fan club, through smart integration of Facebook applications and tapping into expressed brand-fan goodwill. And last but not least, is the incentive of micropayments in exchange for a few minutes of your time.

Perhaps a combination of the above would work, but one thing is for sure, members will need something in exchange for giving up their time, the question is what. Not just that, but Facebook has clearly found that it is a real challenge to get its members to care about the artificial interruptions in their friend-scape (e.g. advertisements). I think the marketing application is smart but ’m not entirely sure that forcing annoying polls to show up on your screen, in addition to annoying ads, will work. Time will tell.

What are your thoughts? Have you ever clicked a Facebook ad? Here’s a poll. Would you answer a poll?



7 Comments

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Cameron Norman
Feb 3, 2009 9:58

Facebook’s overwhelming presence in the lives of millions throughout the world provides one of the most remarkable living labs in the world. Just as Google mines through every single search to aggregate trends based on a wide-range of demographics, so too can Facebook. Facebook already can tell what words are being used on the site (the Lexicon service). But unlike Google, Facebook has the ability to examine the social context in which these words are used via the utilities that they are used in (e.g., the wall, Facebook ‘mail’ etc..). Over time this could amount to the most incredible natural experiment on human community online that has ever existed — provided they keep the data secure, ensure anonymity and privacy, and look at aggregate data instead of creepy personalized statistics (which is a big ‘if’). This would be invaluable to all kinds of groups — from business to non-profit to health care to government.

Dave Jones
Feb 3, 2009 12:07

It strikes me as a bit ironic that Facebook (viewed as one of the most innovative uses of the web to date) is still stuck trying to make the same old web-based business model of advertising work for them. In my opinion, FB’s true value lies not in the demographic information that is deemed valuable by marketers. But rather in the “connectedness” of the networks that people have created and the belief that most people invite those whom they trust into their network. The value of a “trusted” relationship is that it makes business transactions much more efficient. If I have a need (i.e. someone to do my taxes) and I have a medium with which to get a referral from a friend (without just posting it to a “wall” or through “share”), then I can make that transaction occur (and if FB makes it simple to match wants and needs, they can extract ‘rents’). If they could make the transactions occur between businesses and individuals – even better! Obviously, this type of stuff happens in other parts of the web – i.e. InnoCentive – but the networks aren’t as sophisticated as FB’s are from a relationship standpoint. This also isn’t to say that someone like LinkedIn couldn’t make it work either. But since the topic is FB, the question to me is….if it still doesn’t work, why not try something new?

Mike Dover
Feb 3, 2009 13:02

I’ve never clicked on a Facebook ad. I’m pretty much appalled that they are not better at targetting them especially when they know (or should know) so much about me.

Jude Fiorillo
Feb 3, 2009 13:24

Thanks for the thought provoking comments Cameron and Dave.

Cameron: I like your description of Facebook as a living lab – it really does feel like an organic representation of what real people are interested in, as well as their actions, as measured over time. This is clearly information of value to marketers because this information and the media context you mentioned can be pieced together to create a fairly comprehensive identity. In my mind the key for Facebook is that through their data mining they create an accurate ‘understanding’ of who you are and how you act. Once you understand what a customer wants then you are much better positioned to deliver a mutually beneficial arrangement (ads, polls, content etc…that someone actually wants)

Dave: you raise a great point about the connectedness of Facebook being one of the key opportunities for the site. The ability to manage your relationships on a more sophisticated level, across your personal and professional life, has been established with Facebook. The next step is for them to understand how to leverage these social graphs, the “who” you know, and then relate this to the “what” you know and do. Facebook is going to increasingly be interested not just in people talking about activities, but in people using the platform in order to engage in new activities.

Jude Fiorillo
Feb 3, 2009 13:29

Yes I have the same issue Mike.

How can a site that knows everything about me and my interests be so clueless about providing me with ads I have no interest in?

The key to this initiative will be how will people react to the new polls? Will they be just as annoying as the ads or will intrinsic or monetary incentives be enough to engage people in this way?

Advertising Golf on FaceBook « Diary of a Suburban Startup
Feb 27, 2009 12:27

[...] regards to Facebook’s business model, I am sure that monetization through advertising is not a sustainable strategy. And with Facebook [...]

Mikey
Aug 20, 2009 6:47

I’m happy that I ran into this article as I’m very curious about how social platforms like facebook will reach their supposedly potential profit.

If facebook creates a business model to where they can capitalize on their data and connectedness among friends, I wonder how this will go. As Dave mentioned about creating business transactions between friends, I wonder if this means that facebook would have to share some very personal info. How would facebook be able to that two friends have a common interests….like wear the same type of shoes or go on similar vacations?

Look forward to starting up a conversation on this topic!

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