Category Archives: Futurism

Beating Facebook: imagining what comes next

Imagine that it's the year 2020; it's easy if you try. Facebook has been a public company for eight years. Its market dominance is being challenged by something. What is that something?

Something new

One possibility is that people's tastes are fickle, and that just like when something better came along to AOL users, they switched. It hardly matters what the new system is – just that it's new, and that it provides a green field to play on to make new friends and express a new part of your personality, and that it doesn't burden you with everything that you had ever done before that.

There's a perpetual demand for new means of expression online, and a perpetual supply of people trying to build an "eyeball business" to service that quest for novelty. The newness can express itself as exclusivity, or as a better way to share photographs, or by removing features that other systems take for granted. Whatever it is, the barriers for creating Yet Another Social Network Service are low.

Advertising may not sustain growth

A second possibility is that Facebook makes some same mistake that Myspace does of creating too much advertising inventory that's worth too little per use, and that marketing people and advertising people move their budgets elsewhere because they can't (or don't) want to prove their results. General Motors decided that both Facebook ads and Super Bowl ads were of little use, and they might be the harbinger of a bigger trend.

As communications systems grow, there are more and more pieces of them where no one has designed an ad specifically to target the niche that's being expressed in that one piece of online behavior. You thus end up with a huge inventory of space that has to be filled with something, and a need to create that supply of advertisers who don't really care where that ad goes as long as it's frequent.

The dream of the public internet

The Internet purist would hope that Facebook is displaced by open protocols and public interfaces, rather than private APIs. This is also the hope of every development team with a set of bright ideas unwilling to tether themselves to someone else's system.

The history of the public internet has been expansive growth at times (Usenet news, the World Wide Web) alternated with periods where the money and attention flowed into walled gardens (Compuserve, AOL). Facebook is more like AOL than it is like Usenet, and since it has to build all of its infrastructure it's at risk from innovative internetworked distributed systems where many people can play.

Usenet died of its own weight, overrun by success, by AOL users, and by spam and pornography. The Web spawned a whole series of mostly open systems, but really never reinvented Usenet in its pure form of distributed discussion groups where everyone you'd want to talk to on every possible subject is always online. The net might just be too big to have something other than central control decisions make for orderly governance.

Mobile turns the tables

Finally, it's quite plausible that as more of our Internet time is absorbed in mobile devices that no one will figure out quickly how to take enough money from that particular set of users vs. the big-screen computer users who have lots of on-screen space for ads.

Imagine there's no Facebook; it's easy if you have a long memory back to eight years ago. There's some arc that innovative online systems go through from early adopter to mainstream to old news. A lot of new systems will try to capture our attention, our friendships, and our willingness to pay over the rest of the decade, and the network of 2020 will not simply be a bigger version of the net of 2012.

Updated May 30, 2012 to make it about 2x as long.


Some notes afterwards:

Ad Age Digital reports on brand marketing and its fickle treatment of Google+ as newcomer Pinterest takes up reader and advertiser interest:

Google+ launched brand pages six months ago, introducing new social lingo, including "hangouts," "circles" and "+1s." But strike up a conversation with a digital marketer these days, and talk of "+1s" has been replaced by that of "pins."

 

This 2011 piece by Douglas Rushkoff spells out the "we've seen it before" attitude of other social networks and their short term success:

If you were there for Compuserve, AOL, Tripod, Friendster, Orkut, MySpace or LinkedIn, you might have believed the same thing about any one of those social networks. Remember when those CD Roms from AOL came in the mail almost every day? The company was considered ubiquitous, invincible. Former AOL CEO Steve Case was no less a genius than Mark Zuckerberg.

GigaOm in 2011 on Google and Myspace and poor quality advertising:

Think back to 2006: That’s when they signed the $900 million, three-year advertising deal to turn Google into Myspace’s exclusive providers of text ads and search. It was a great cash prize for Murdoch’s purchase, but actually ended up being a weight around its neck. The deal’s targets required Myspace to crank up page views and increase already-heavy advertising space at precisely the same moment that Facebook was pushing forward with a clean and easily-understood design.

 

The problem of poor quality advertising on Facebook is noted in the context of constipation ads on Zuckerberg's wedding announcement by Chris Matyszczyk of CNET.

If ads for heart attacks and constipation on its most important page of celebration are anything to go by, the company has a long, long way to go in order to even begin to make advertising work. May I wish the happy couple all the wealth, um, happiness in the world. I hope as they log on to Facebook this morning to view all the good wishes, they aren't being served with ads for divorce lawyers, marriage guidance counselors and, um, investment advisers.

 

Regarding mobile revenues, see the Facebook amended S-1 discussion of revenue risks:

increased user access to and engagement with Facebook through our mobile products, where we do not currently directly generate meaningful revenue, particularly to the extent that mobile engagement is substituted for engagement with Facebook on personal computers where we monetize usage by displaying ads and other commercial content;

 

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