Six Pixels of Separation - The Blog
September 28, 2012 9:33 AM

The Gift Of Facebook

Let me be clear: I am still bullish on Facebook. I am not bullish on advertising as Facebook's main revenue model.

In March of 2011, I wrote a blog post titled, F-Commerce - Rise Of The Facebook Consumer. I never liked Facebook as an advertising platform. There is a much bigger marketing and sales opportunity that exists. While I understand that close to one billion people are connected there and that you can target your message down to a specific segment, I still don't think that people are on Facebook to consume content in the same way that they are consuming media when they're reading a newspaper or magazine online (which means that they're less inclined to pay attention to ads). The reason I'm such a massive advocate for Google and AdWords is because the advertising platform fits in with the user experience (it's additive). While I think Facebook can (and will) figure out their own, AdWords-like model that best fits their environment, it still has a ways to go.

I love Facebook as an economy.

With close to one billion connected people who are there for social reasons, there is an underlying economy that Facebook is capable of grabbing (see my blog post on F-Commerce above). I was thrilled to see that Facebook is getting set to launch Facebook Gifts. With this commerce-based business, you can buy presents for your friends, get them shipped quickly and I especially like the ability to only pay for that gift once the receiver accepts it.

Physical and virtual combined.

It's cool that I can send real flowers to a friend who is celebrating a new job. It's amazing that I can send some digital Starbucks bucks to a employee who went that extra mile. It's going to be even more amazing when Facebook can scale this platform into a world where you can easily send anything physical or virtual that you desire (the latest LEGO collectible or a $200 virtual gift card to the Apple store).

Facebook is an economy.

If they can nail the experience that Amazon provides, couple it with a Square-like ability to easily make the transaction happen (just a couple of clicks) and build an engaging experience around it (check out how Facebook sends the receiver of the gift a customizable greeting card), the affiliate-like business opportunity will be unprecedented and - if they do it well - will easily dwarf advertising revenues and the like. On top of that, this type of social shopping experience creates a more direct relationship with Facebook and their community members. On top of that, comes powerful data, information, analytics and understanding of the consumer's mindset and activities when they are deeply engaged in an online social network.

Moving beyond the browser.

As more and more people connect to Facebook through their smartphones and tablets, the even larger opportunity is for Facebook to take the lead in mobile social commerce (say that five times fast). The majority of retailers are struggling to find the best e-commerce experience on the browser-based Web, and few of them are pushing full-steam ahead into mobile commerce. If done well, Facebook could provide the same type of experience that Amazon now offers third-party resellers (their own virtual "stores" within the Amazon ecosystem). It would be a virtual Facebook shopping mall of trusted vendors who are supplying timely gifts to people amongst their most social of connections.

That's not all.

As I blogged about in F-Commerce - Rise Of The Facebook Consumer, I believe Facebook can (and should) create their own monetary exchange (like Facebook Credits). Owning the consumer, owning the experience and then owning the actual currency structure that lies beneath it, suddenly makes Facebook look like a country unto itself (and yes, this is something PayPal and others will need to pay attention to).

It seems like a much more interesting business model than advertising revenue, doesn't it?

By Mitch Joel


Comments Comments Feed
  • Posted by Bob Farnham
    Mitch Joel

    Ironically, when I asked a friend if she would buy a gift through Facebook Gifts she responded, "No way." Yet she "likes" Amazon and PayPal. With the "buy local"movement building up steam, how could the Facebook Gift idea support that effort rather than building on the big business model?

    Reply
  • Posted by Laurel Miltner
    Mitch Joel

    Mitch,

    Very interesting to see Facebook moving in this direction. Obviously, you were onto something back when you made this prediction. ;)

    Another area where I see Facebook having huge revenue potential is in monetizing products for brands that have build presences and followings on the platform. Particularly, I could see plays in Page analytics and social CRM. I talk about this a little in a post I published shortly after Facebook's IPO, as part of a broader discussion on Facebook marketing strategy, if you're interested: http://www.pr2020.com/blog/facebook-marketing-strategy-shift

    Have a good weekend.

    @laurelmackenzie

    Reply
  • Mitch Joel

    Hmm, Facebook is a shrinking economy by 12% year over year in August according to Comscore. I'm bearish on Facebook.

    Reply
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    Mitch Joel

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