The Facebook Strategy

Facebook is a profitable business, and it’s growing fast. But Facebook the business is just a day job—Facebook the product is where the action is. Facebook underscored that with their recent redesign and F8 announcements:

• Their concurrent reading, watching, and listening features are almost certainly not what advertisers are clamoring for. But they are to status updates what the Semantic Web is to search.
• Timeline serves no real busines purpose, but it’s a beautiful product that showcases what Facebook has created.
• The news ticker exists to make uncurated streams of updates look pointless. It’s oddly poetic, since most consumer Twitter usage is either on a small screen or in a generally-ignored tab. (Granted, some people use Tweetdeck, and lots of Tweetdeck users have it running fullscreen on one monitor at all times. Compare Twitter’s last valuation to Tweetdeck’s rumored acquisition price to benchmark the relative importance of these markets.)
• Zero friction: Facebook is pushing automatic sharing and automatic curation. Their goal is for a Facebook profile (and timeline) to be the output of lots of actions that don’t specifically involve Facebook at all. Facebook doesn’t want you to create an identity on their site; they want to scrape your identifying activities and turn that into your profile for you. Facebook is no longer a memoir; it’s a semi-authorized biography.

Facebook wants people to spend more time on their site because they’re pretty sure it’s better than the next best option. There’s no particular category of content that doesn’t fit with Facebook’s vision of what you should access on Facebook.com. If you consume it and you care what your friends think of it, Facebook’s goal is to fit it into a Facebook app.

That anti-business attitude gives Facebook’s businesses a competitive advantage. If they care about their product and their competitors care about the next quarter, both sides will be able to get what they want. But the default transaction will be to cede a little more control and a little more traffic to Facebook, in exchange for some short-term revenue and distribution.

If you want to estimate what Facebook would like like if they focused entirely on revenue, the best way might be to calculate the ‘consumer surplus’ that accrues to companies like Netflix and Spotify when they gradually turn themselves into Facebook apps.

Other Facebook news:

• Facebook’s ruthess product focus pays off. Facebook has the best follower/click ratio.
• Dustin Curtis writes a retrospective on Timelines and Lifepath.me (a very similar service.). That service is available for sale on eBay.
• Numair Faraz remembers being a “Facebook fool.” This isn’t Facebook-specific; every big company does deals that a) they can’t fully disclose internally, and which b) thus render some internal projects suddenly worthless.
• Ultra-targeted ads: Orabrush used Facebook ads to target Walmart’s buyers. There’s no good way to extrapolate from this—it’s interesting because it’s unusual—but it presents an interesting paradigm for B2B social media marketing: if you can target particular consumers well enough, you can target consumers who happen to make decisions on behalf of businesses. And given perfect targeting B2B marketers will always outbid B2C marketers. One result of this: important people will experience social media ads as relevant but really boring; less important people will see interesting ads and wonder how Facebook could possibly turn a profit.