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Original URL: http://www.theregister.co.uk/2007/11/09/facebook_analysis/

I'm a walking billboard .... bitch

By Andrew Orlowski (andrew.orlowski@theregister.co.uk)
Published Friday 9th November 2007 23:32 GMT

On Wednesday, Facebook boss Mark Zuckerberg boasted (http://www.theregister.co.uk/2007/11/07/facebook_socialads/) that the "next 100 years" of advertising began here.

On the face of it, it looked like Web 2.0 had found its "Long Boom" moment. Facebook has yet to turn a profit, so Zuckerberg hardly seems in a position to advise other people how to make money - let alone place himself in a pantheon of historic business greats. In Web 2.0-land, merely "being there" is a substitute for having "made it".

But then Zuckerberg is no stranger to bluster. This, notoriously, was the 22 year-old who had "I'm CEO...bitch" on his business card.

Behind the calculated bluster were a collection of ideas perhaps equally designed to distract the attention (no pun intended).

Of the three ideas Zuckerberg outlined, one in particular provoked horror and ridicule. It was to turn Facebook users, accustomed to its clean and spare UI, into human billboards. Advertisers could build presences in Facebook - at the moment, you must be a person - giving users the opportunity to "affiliate" with them.

"Users can become a fan of a business and can share information about that business with their friends and act as a trusted referral," is how the company described it.

"What do the users get in return?" asked the IT commentator Nick Carr. "An animated Sprite Sips character to interact with."

But Nick is forgetting that this cuts both ways - it isn't a static picture at all.

Take the example of Stella Artois, which was once a "premium" lager brand owned by brewing giant InBev. In recent years this has acquired the notorious nickname "wife-beater". This is now so pervasive, that lawyers defending their clients on assault charges refer to the "Stella" defence. Sales fell 10 per cent last year - and it isn't quite so "premium" any more.

An affiliation is not an endorsement - yet Facebook collects either way. Would Stella's fall have been accelerated by Facebook affiliation? Almost certainly, for on the web, jeering is the background noise. Only the most delusional marketing person thinks that their brand is in any way enhanced by proximity to the mob - brand advertising is all about keeping a distance. A corporate reputation is like a party frock - it crumples easily.

So shrewder advertising spenders will quickly realize the dangers in such 2.0-style "interactive" engagement and how phoney "conversations" with customers really are - and wisely gravitate towards traditional methods, such as plain ol' display ads.

Nevertheless, and here's the rub, they still want to have better, more targeted advertising. And even the slightest improvement helps.

Facebook's future is much more down to who it lets into the club, rather than anything we heard this week.

Don't be bluffed by bluster

The picture is far more nuanced than a simple analysis permits.

Because Facebook has wrapped up pretty much every internet application protocol ever invented under its umbrella, it's the portal the old dotcom portals wished they would be. [MySpace gave us the first hint of this shift two years ago, when we observed that users rarely left MySpace - using it for everything except IM.]

For Facebook today, most of its value is as an email replacement - which represents the balkanization of the internet, with people only talking to people they already know. This is socially dismal, but again, good for advertisers. We've also seen a successful example of transactional revenue in the Facebook application iLike (http://www.ilike.com/), which allows you to buy concert tickets. Others will find a way to persuade the in-Facebook brethren to part with their money.

So it's worth remembering that there are many businesses within Facebook, and we're barely at the nebula stage: the star is still forming.

This week reaction to Facebook's announcement fell into two camps. The cynics saw it as confirmation that Web 2.0 companies were only ever out to screw their users as quickly as possible. The technology utopians appeared shocked - shocked! - that Facebook wanted to monetize its user base at all.

The truth is somewhere in between. Facebook may be far cleverer than we've been told this week. ®

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