Om Malik and Matt Ingram are asking why Facebook doesn’t simply ask their 40+ million users to determine what the users would want in terms of advertising on a social network.
Excuse me but are you guys naive or just starting your holiday drinking a bit early in the season?
The answer is that actually using social networking as a springboard for advertising ideas, although it would be totally consistent with the claimed model of what a great social network will be, would be totally inconsistent with maximizing profit. I am *so tired* of hearing people talk about how what is best for us user gooses is best for those advertising ganders. It just ain’t so!
Advertising – even good ads people think they really like – are all pretty much rooted in the old saw “There’s a sucker born every minute”. Sure there are good products, and sure most companies are honest, and I even think many ads are reasonably “true”. But the point is that good ads must inspire buying behavior before they inspire wise behavior, and any marketing effort worth it’s even it’s weight in online ads will work to make buyers, not work to make wise people.
Most wise people don’t buy a lot of stuff unless they stumble upon great wealth, and even then most do not become rampant “consumers”. They reflect, they travel, they exchange ideas, they learn and they love. Shopping? It’s not on the list of activities that spawn great human enlightenment, and it never will be. Fun? yes. Popular? Sure. Profitable for companies? YES! Shopping, and more generally commerce online is the only sizeable revenue source, making it the key to internet innovation and the driver of internet changes. User centricism is generally going to be trumped by this force with some notable exceptions like Wikipedia and perhaps Open Social.
The very best marketing ties real human factors to products, but in the same way “conversational marketing” is an oxymoron it is not reasonable to expect “social network advertising” to be glowing extension of the social networking experience. Maybe in Mark Z’s dreams, but not in his increasingly profit-centric reality.
I’m strongly behind the idea that online community needs should trump profits. Also, I agree that following this mantra can lead to some successes. Google initially frowned on advertising while they built a fantastic search system, but note how it took advertising to make them the key online player they are today. Not a little advertising either – billions and billions and the prospect of billions more.
Can social networkers design ads they like? I doubt it. However this could come about indirectly. Google Open Social is the most likely source of social networking advertising innovation for the very reason that Google *makes their big profits elsewhere*. Google can sweep in with a truly user-centric social model, monetize it to a limited extent using adsense, but from their perspective leave their core cash dow – PPC search – intact. Also, Google then conveniently puts a huge, perhaps even deadly crimp in Facebook’s potential to become a dominant online environment. As I’ve noted before Google is brilliant at managing to do the right thing and in doing the right thing reap big benefits for … Google! (How DO they do that so often !?)
Oh, speaking of NOT doing the user centric thing because it might threaten the cash cow we need look no farther than … Google. Note their ad standards have relaxed quite a bit over the years while keeping “user friendly enough” to avoid the sharp criticisms that should have been levied at Google when they slapped ads on the left side of the home page, conveniently blurring the distinction between organic and paid listings, then stopped prominently shading the advertising. Oh, they also allowed bogus sites to run adsense, didn’t crack down early enough on the spiral of massive click fraud, and have even embedded travel advertising in organic listings while still claiming they don’t do it (example: try this search: “SFO to JFK”).
So, the moral of Beacon is not that profit sites should stop acting like profit sites, rather that since there is a sucker born every minute, we suckers need to stick together, and every so often we need to stick it to the man to keep him on track. Maybe that’s all Om Malik is saying today, and if so I’m with ya!
Joe Duck 
Facebook is either underestimating the intelligence of consumers or they are just evil. Remember Generation-X? We’re older and wiser now. The younger generations are even more cynical. If the endorsement is not genuine, consumers will see right through it. If Facebook’s actual motivation was what they said it was then they would have attempted to make the endorsements relevant. They didn’t. It was all a smoke screen. Beacon has nothing to do with endorsing products. It’s all about collecting, aggregating, and monetizing as much information as they can get their hands on. The more information they have the bigger monopoly they become. By abusing their users in such a condescending way Facebook is making the case for why something like Open Social will be a very attractive alternative to Microsoft 2.0.
It’s all about collecting, aggregating, and monetizing as much information as they can get their hands on
Scott I certainly think you are right about that part, but I think this is the way companies are going to act whether we like it or not. I don’t think there will ever be companies that can have as a core value doing *everything* in the users best interest. This is just not a realistic expectation…
“Google initially frowned on advertising …but note how it took advertising to make them the key online player … Not a little advertising either – billions and billions and the prospect of billions more. ”
Are they the key online player because they supply good advertizing leads or simply that no one else can supply any advertizing leads at all. Not every clicker has to be a voracious consumer of material goods, there just has to be enough such clickers to make the various parties involved happy. I myself rarely read and even more rarely click on any google supplied targeted advertizing. For years TV ads were broadcast rather than narrowcasted. For years billboards visually accosted all passersby without any sort of narrow focus. Yet search engines and social network monetizers are claiming an ability to engage in narrowcasting of ads. I think its more appropriate to refer to it as “medium-casting”: neither broad nor narrow. Users get fed up with ads. Even new, interesting, relevant and entertaining ads simply become too much after awhile. There used to be jokes about water pressure spiked during the commercials as massive numbers of TV-viewers abandoned the tv-set for the bathroom, so Art Linkletter started doing the commercials as part of his show during non-advertizing timeslots. Social network marketing claims the ability to do about the same thing: deliver a consumer who is of higher quality and less annoyed by the ad. So okay: a poster on a forum about a particular automobile may be more interested than the average consumer, but does he really buy more cars than the average consumer? How much value is there in developing a site of car lovers? Does the site focus on the cars or the ads? The ads will always annoy the site’s users to some degree but a focus on the data quality of the site has to be paramount in order to attract and retain the users.
FG – Google still has the best “contextual matching” advertising algorithm. I remember talking a few years back with the Microsoft guy in charge of getting their contextual routine going and he was really impressed with Google’s work in this area. Yahoo’s challenges with their matching are part of the reason they make less than Google per page view. I think this is another example of Google doling an “OK” job pleasing users while doing “great” job pleasing advertisers and optimizing revenues. The best match for revenue purpose is NOT going to be the best match for the user, even though some would very speciously claim it is, arguing that over the long haul users will defect if they don’t get high relevancy or are bothered with irrelevant ads. I’d argue that this is only partly true – we are creatures of habit and therefore we are easy to manipulate.
I like your idea that it’s really “medium-casting” because it is very unusualy to really target somebody with a highly relevant item.
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