Facebook Turns Ten

It's a big month for Mark Zuckerberg. Not only does Facebook turn ten but it does so very profitably.

In its early years, before Facebook was monetised, there was a lot of scepticism around how will he make money. A few initiatives went pear shaped, such as revealing too much or unplanned information about members, but eventually they figured out an advertising model that worked on desktop. Than smartphones took off, and an alarming number of people migrated to use apps and mobile sites to access their accounts. Market scepticism returned, but Mark Zuckerberg persisted, and this week Facebook 'reported profits of $523m and a 63% increase in revenue for the fourth quarter, beating expectations' (BBC). And 'he did it while saving shareholders money and hugging the planet' (NY Times).

Put aside the controversy around the founding of Facebook, the privacy debates, the trial and error of the last few years, and you have to give it to the lad. He is as ambitious as ever, reflected in a recent speech at the Open Compute Project. He wants to change the way tech companies do business, and as the organisations' name suggest (where he spoke about this), do so via open sourcing. Employing hundreds, thousands, or even hundreds of thousands people to build and better systems is surely unbeatable.

He wants to connect the world and everything in it, creating something that has been previously described as the 'internet of things'. Ambitious? Yes. Can he do it? I'd say admirably he is on the right track. And yet, Facebook's mission 'to give people the power to share and make the world more open and connected' arouse some cynicism in me about the ultimate motivation of a company whose business case and in fact their survival rests on exploiting its users' data.

Retargeting works - Twitter is opening up its inventory

At first we sold digital advertisements at a fixed CMP (Cost Per Thousand) rate. Than as more companies developed ecommerce platforms, we all started looking at clicks/ click through rates (CTR) and conversions.

Under pressure from marketers to drive campaign efficiency higher, we got smarter and applied technology to narrow in on the clients' target market. By location (IP address), time, database information (such as email client logins) and more recently by demonstrated behaviour.

Enter retargeting. We started serving ads with products and services that people have just researched and in-market for. We blatantly re-messaged them and, surprise surprise, people noticed it. Outrage ensued. Battles over privacy meant regulation (in some countries) over cookie usage, alerts and messaging.

The storm (more or less) settled and Facebook allowed retargeting about a year ago. Now, a little over three years since they opened advertising up for the first time, and Twitter is prepping an online ad exchange to rival Facebook's. Twitter Exchange, 'TWX' or thereabout. (Abbreviation is speculation only!)

Why? Because retargeting works. And it works extremely well in driving conversions.

Twitter, great plans!

And Twitter- do allow dynamically served creative messaging (opposed to static ones, like those currently on Facebook). That's one way to ensure a stronger (>200%) CTR, as well as better conversion rates. And Twitter, that right there is what it's all about.

What does your Facebook profile photo say about you?

It gives away your cultural background, as revealed by a recent study, based on whether the photo is zoomed in or out.

Visualising Friendships – Facebook

‘When the data is the social graph of 500 million people, there are a lot of lenses through which you can view it. One that piqued my curiosity was the locality of friendship. I was interested in seeing how geography and political borders affected where people lived relative to their friends. I wanted a visualization that would show which cities had a lot of friendships between them.’ (Paul Butler, intern on Facebook’s data infrastructure team)

The result? The result:

Thanks to Political Calculations for posting it.

Last week’s ‘yin & yang’ of social networking

On one side there is the immensely successful Facebook, with rapidly increasing ad revenues – and on the other side there is Bebo, sold by AOL for a mere $10m (USD) whereas it was purchased for $850m two years ago.  Bebo was the pioneer of social networking in many respects, such as deep ad integration with video, widgets and engagement marketing. I’m wondering what plans the hopeful buyers have to get the balance sheet back on track – which in the name of healthy competition I hope they do? Whatever they may decide to do, first and foremost they will need to win over the audience. As before a social networking site can be commercialised it needs to reach critical mass.
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Facebook & Microsoft

When Microsoft purchased a 1.6% stake in Facebook late in 2007, some applauded but there were more who criticised. Mainly the price rather than the two companies linking up. Microsoft paid a whopping $240M for the 1.6% stake.

However, a couple of years on and it looks like, it may just have been worth it. According to eMarketer, Facebook is closing the revenue gap with the Portals and is predicted to make between $1-2 billion (USD) this year. (Compare that to the big 4 US Portals in the chart below.)

If they they reach the upper limit of that prediction, 1.6% will equal to $32m share of (although not profit, but) revenue. However, at the pace Facebook has been growing revenues in the last couple of years, that investment may just pay for itself sooner than many anticipated…

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