How Advertisers Catch Up to Consumers in Social

Facebook and other identity and behavior networks have created new behaviors - and these behaviors have had no trouble attracting the attention of consumers.  The new behaviors have been so empowering of consumers, that as they adopt new behaviros, they have learned to tune out advertising even more effectively.  Consumers have even learned to kill ads, concepts, and brand strategies they dislike en masse.

Debra Aho Williamson, principal analyst at eMarketer in Seattle, noted that when the firm published its most recent forecast for digital advertising back in February, it projected that Facebook revenue would probably double again this year to $6 billion, a number she said is likely now out of reach.

"Consumers have adopted social media a whole lot faster than advertisers," Williamson said. "It's taking them a lot longer to figure out how to fit social media into their plans. [TheStreet.com]

This gap in "monetization" should be viewed in the context of how all innovation takes time to conquer relevant adoption curves and settle into a business model that works for all participants.  With the pace of today's change, we have cases like Groupon, where the vectors of growth point one way, while the sustainiability of the business is highly questionable.  This phenomenon in the information sector is likely to continue as the flow of information between market participants becomes effortless.  It is even worthy of excellent satire from McSweeney's: Ponzify 

So it's not just about your 2 Million app downloads that net you some nice venture funding for "traction" in the marketplace.  Make sure you're paying attention to how your users behave, as well as how their behavior change when you add "monetization" strategies.  

Watch Facebook's Mobile ad product introductions carefully.  If the users hate the products, and find them annoying, intrusive, or unstable, that's bad for the Facebook ecosystem and engenders the kind of hatred consumers have for companies like AT&T, in which they stay with the company but hate it because they cannot easily leave.  Conversely, if the consumer ignores the ads,  and skps right through them, that's bad for advertisers, who need at least some user attention to get value out of the ads.  The holy grail for facebook is helping to identify the ads in the middle: the ads so content-like that consumers will see them as a net benefit.  

This is small thinking strategy for Facebook, at best.  Which are the two or three brands whose social engagement strategies you like as much as you do their products?  Those are the ads that will be premium inventory in your newsfeed.  The social experiences that consuemrs want, which are so attractive consumers will seek them out for their value, are the name of the game for Facebook, because these experiences will have to rent access to Facebook's identity network.  And that is where the money will be.

Is Android really "open"?

Reading The dirty little secret about Google Android, I've been enjoying the insightful analysis of how Apple's decision to free the device from the restrictions of the carrier were key to the identity of the device, and seem more in keeping with what Google originally promised with the Nexus One.  

Unfortunately, the Nexus One flopped.  The non-Apple customers buy their wireless devices and service very differently.  Mass-market phones, even smart phones, need marketing spend behind them, and those campaigns are linked to carrier restrictions and modifications which compromise the "open" vision.  The upshot, according to the article:

the consequence of not putting any walls around your product is that both the good guys and the bad guys can do anything they want with it. And for Android, that means that it’s being manipulated, modified, and maimed by companies that care more about preserving their old business models than empowering people with the next great wave of computing devices. 

I think this rolls back into the S-Curve of technology adoption.  

[credit: Wikipedia]

As the market matures and a it becomes a mass market product,  smart phones and apps become both more standardized and more understandable for the average community.  We see and hear idiotic advertisements exhorting us to be "twin texting turbos" with the Droid 2.  And this is great for Verizon's bottom line, for marketers and developers launching Android apps, and for mobile web content growth.  But it basically sucks for the innovators who want to be able to get a great device and move from carrier to carrier in the US market.

Other perspectives: Nic Brisbourne of DFJEsprit writes

[T]he longevity of the app paradigm versus open web standards will depend in large measure on who wins the hardware battle.  Open standards at the software level probably will probably only prevail if hardware manufacturers with a PC mindset prevail over those with a preference for closed ecosystems...

Unfortunately, the principles of openness have been interpreted to mean an open app ecosystem, and haven't changed the economics of the closed carrier/device model in the US.  Google wants a big market for Android apps and as many users as possible, and that motivation is at cross-purposes with the open-ness that geeks want.

Who cares if the cool kids leave Facebook?

The cool kids are leaving Facebook, says Pace Lattin based on data from InsideFacebook: the 18-35 demographic is now having negative growth in this "early adopter" demographic.   I can't yet find the raw data, but let's assume the trend is true.  Let's assume that the explosive growth of Facebook for mobile doesn't have anything to do with it. 

Any platform that requires the "cool kids" to be there for it to be successful will ultimately suffer the same fate.  We can't all be East Village hipsters enjoying our own exclusive online party, with VCs chomping at the bit to try to invest in the things we think are cool.  Even if all the cool kids leave, Facebook will still have a huge business with the uncool kids.

However.  Viewing Facebook itself as the cornerstone of social is just false. They beat out all the other social networks, more or less.  Round 1: Facebook.  Bigger, longer term, the interoperability of social graphs will make the choice of any one web site unimportant.  

Any platform that requires the "cool kids" to be there for it to be successful will ultimately suffer the same fate.  We can't all be East Village hipsters enjoying our own exclusive online party, and there will continue to be plenty of business opportunities for Facebook even if those users leave.

However.  Viewing Facebook itself as the cornerstone of social is just false. They beat out all the other social networks, more or less.  Round 1: Facebook.  Bigger, longer term, the interoperability of social graphs will make the choice of any one web site unimportant.  

The fact is, hipsters still have parents, and teachers, and friends they want to connect to, and some they want to be able to ignore.  Technologies built on opening the social graph and intelligent selectively sharing the content we ourselves consume is the direction we're heading.  

Round 2: unknown.

we haven't really seen the companies that are thinking about this.  Check out where Diaspora is going these days, and see the interoperable social  future.